Income Tax (Trading and Other Income) Act 2005 section 111

Election for application of herd basis rules

Section 111 allows a person who keeps or has kept a production herd for trade purposes to elect for the herd basis rules to apply, so that herd animals are not treated as trading stock but are instead dealt with under special rules.

• A person who keeps or has kept a production herd for trade purposes may make a herd basis election
• Where a herd basis election is in effect, animals in the production herd are not treated as trading stock but are instead dealt with under the herd basis rules in sections 114 to 123
• Although the chapter is expressed in terms of farmers, it applies to anyone who keeps or has kept a production herd for trade purposes, whether or not the trade is farming
• References to keeping a production herd throughout the chapter mean keeping it for the purposes of the trade, so herds not connected with a trade are outside the scope of these rules

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