The Wade Case: An analysis

Abstract

The Australian Taxation Office (ATO) considers ALL animals sold as part of a primary production business as trading stock. However, the word ALL is not contained in s 995 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997); rather, the ATO view is based on its interpretation of the findings in Federal Commissioner of Taxation v Wade (‘Wade Case’).

This paper looks at the cases examined by their Honours in the Wade Case and similar cases related to the sale of livestock. It argues that the findings of the Wade Case may have been misinterpreted and that the ATO’s view is not as valid as is generally accepted. It argues that the revenue from sale of stud, or breeding, animals should be taxed under the capital gains tax provisions of the ITAA 1997 and not as income according to ordinary concepts.