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EC 25: Cost price, replacement price, or market value
or “How to value your specified livestock using cost, replacement, or market prices”
You could also call this:

“How borrowed livestock is counted for tax purposes”

When you borrow livestock from someone, you need to follow some rules about how to count them. If you have to give the animals back or pay for them in full, you’re treated as if you own them for tax purposes.

At the end of each year, you need to calculate how many animals you have. You do this by taking all the animals you have, including the ones you own and the ones you borrowed, and subtracting the number of animals you borrowed.

If the result is a positive number, it means you have extra animals that are considered yours. If it’s negative, you need to adjust your total by treating it as a negative number.

For example, if you have 100 cows in total, but 80 of them are borrowed, you would calculate: 100 - 80 = 20. This means you’re treated as owning 20 cows for tax purposes.

Remember, this only applies to the animals you have at the end of the year, and only if your agreement to borrow them is still active at that time.

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Next up: EC 26B: Entering partners' cost base

or “How to calculate the cost of inherited livestock for new partners in a business”
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Part E Timing and quantifying rules
Valuation of livestock: Other methods

EC 26Bailee’s treatment of livestock

  1. This section applies when, under a bailment, lease, or other agreement,—

  2. a person (person A) has the use of specified livestock; and
    1. person A is required—
      1. to return the livestock to the person who made it available; or
        1. to pay the person full compensation for it.

        2. Person A is treated as owning, and must take into account at the end of an income year, the total number for all classes calculated using the formula—

          total livestock − bailed livestock.

          Where:

          • In the formula,—

          • total livestock is all the livestock that person A has on hand in a class at the end of the income year, including—
            1. the livestock that they own; and
              1. the livestock that they have the use of under the bailment, lease, or other agreement:
              2. bailed livestock is all the livestock in a class that person A has been given the use of under a bailment, lease, or other agreement that remains in force at the end of the income year.

                1. If the result of applying the formula in subsection (2) is positive, person A is treated as the owner of any surplus livestock. If the result is negative, person A must adjust the total number described in subsection (2) by treating it as a negative number.

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