,canada ,cu/oms                       #a
& ,rev5ue ,ag5cy

          ,9t]pret,n ,bullet9
    
,subject3 ,9come ,tax ,act
  ,live/ock ( ,f>m]s
,numb]3 ,,it-#dbg;,r
,date3 ,june #d1 #aiic
,ref];e3 ,subsec;n #bh7#a7 7al sec;n
  #bi1 subsec;ns #bh7#a.a71 7#d7 &
  7#d.a71 #fi7#a.a71 #gj7#b7 & 7#c71
  #hh7#a.f7 &! def9i;n ( 89v5tory0 9
  #bdh7#a71 & p>agraphs #fi7#a77a71 7b7
  & 7c71 #he7#a77c4#b7 & #hg7#b77b77

               ,applic,n
    
  ,? bullet9 c.els & replaces ,9t]pret,n
,bullet9 ,,it-#dbg dat$ ,m>* #e1 #aigi4
,except z o!rwise /at$1 ! -;ts 9 ?
bullet9 apply 6fiscal p]iods -m5c+ af
#aihh4

                                      #a
                ,summ>y              a#a
    
  ,? bullet9 d1ls ) v>i\s topics ( 9t]e/
6f>m]s :o raise live/ock & h *os5 ! ca%
me?od ( det]m9+ 9come4 ,x def9es
live/ock4 ,x 4cusses ! 9v5tory adju/;ts
relat+ 6taxpay]s us+ ! ca% me?od4 ,!
bullet9 al 4cusses "s (! tax 3sequ;es (
us+ ! ca% me?od 9 rel,n 6a f>m] 2com+ a
non-resid5t ( ,canada1 ! d1? (a f>m]1
gifts ( live/ock & o!r 9v5tory 0a f>m]1
! 4posi;n 0a f>m] ( live/ock & o!r
9v5tory 6a corpor,n &! amalgam,n or
w9d+-up ( corpor,ns 9 ! busi;s ( f>m+4

          ,4cus.n & ,9t]pret,n
             7p>agraph #a7
    
#a4 ,proce$s f ! sale ( live/ock1 9clud+
  ^? animals 9 a basic h]d1 >e 0virtue
  (! def9i;n ( 89v5tory0 9 subsec;n
  #bdh7#a7 3sid]$ 6be 9come if a taxpay]
  is 9 ! busi;s ( f>m+ 7ref]r$ 6z 8f>m]0
  9 ? bullet974 ,a f>m] :o has a basic
  h]d is p]mitt$ a =mula deduc;n on   #b
              ,,it-#dbg;,r           b#a
  bo? an op;nal &a m&atory basis "u
  sec;n #bi 9 ! ye> ( 4posi;n ( any
  live/ock 9 a basic h]d4 ,see ! curr5t
  v].n ( ,9=m,n ,circul> #hf-f1 ,basic
  ,h]ds1 =a 4cus.n on basic h]ds4

           ,m1n+ ( ,live/ock
             7p>agraph #b7
    
#b4 ,live/ock is n def9$ 9 ! ,9come ,tax
  ,act1 b 9cludes any & all animals1
  7i4e4 liv+
--------------------------------------#b
  organisms : >e n plants or bact]ia7 if
  !y >e kept1 ma9ta9$ & br$ "u 3troll$
  3di;ns = pr(it4 ,? def9i;n does n
  apply1 h["e1 = purposes (a basic h]d4
  ,animals 9 a basic h]d >e def9$ 9
  subsec;n #bi7#c7 69clude only cattle1
  horses1 %eep or sw9e4



                                      #c
         ,ca% ,me?od--,9v5tory       a#b
        ,adju/;ts 7p>agraph #c7
    
#c4 ,! op;nal & m&atory 9v5tory adju/;ts
  "u p>agraphs #bh7#a77b7 & 7c7
  respectively apply 6a f>m] us+ ! ca%
  me?od 9 -put+ 9come f a f>m+ busi;s4
  ,p>agraph #bh7#a77f7 requires t ! am.t
  9clud$ 9 9come "u p>agraph #bh7#a77b7
  or 7c7 reduce 9come 9 ! immly
  subsequ5t fiscal p]iod4 ,see ! curr5t
  v].n ( ,,it-#ebf1 ,f>m+--,ca% ,me?od
  ,9v5tory ,adju/;ts1 =a 4cus.n on ^!
  adju/;ts4 ,! op;n "u p>agraph
  #bh7#a77b7 provides ! f>m] ) an
  opportun;y 6av]age 9come4

      ,*ange 9 ,resid;e 7p>agraphs
                 #d-e7
    
#d4 ,a f>m] us+ ! ca% me?od :o c1s$
  6reside 9 ,canada or c1s$ 6c>ry on a
  f>m+ busi;s 9 ,canada af ,july #ac1
  #aiij & at ! 5d (a "picul> tax,n ye>
  is n a resid5t 9 ,canada & n        #d
              ,,it-#dbg;,r           b#b
  c>ry+ on a f>m+ busi;s 9 ,canada w 2
  requir$ 69clude 9 9come =! "picul>
  tax,n ye> ! fair m>ket value ( a3.ts
  receiva# f ! f>m+ busi;s4 ,d\bt;l or
  uncollecti# a3.ts receiva#s w 2
  reflect$ 9 ! fair m>ket value (!
  receiva#s4 ,al? ? require;t applies
  6ea* tax,n ye> 9 : ! 3di;ns ( subsec;n
  #bh7#d7 >e met1 x does n apply 6an
  am.t t is o!rwise 9clud$ 9 9come 9 !
  ye> or a previ\s tax,n ye>4 ,? provi.n
  may apply ":3
  7a7 a ,canadian resid5t c1ses 6c>ry on
    a ,canadian f>m+ busi;s & 2comes
    non-resid5t1
  7b7 a ,canadian resid5t c1ses 6c>ry on
    a f>m+ busi;s 9 ano!r c.try & 2comes
    non-resid5t1 or
  7c7 a non-resid5t c1ses 6c>ry on a
    ,canadian f>m+ busi;s4
#e4 ,a f>m] us+ ! ca% me?od :o c1s$
  6reside 9 ,canada1 & ^: 9v5tory f a
  f>m+ busi;s c1s$ 6be us$ 9 3nec;n )a
  busi;s c>ri$ on 9 ,canada1 at a     #e
              ,,it-#dbg;,r           c#b
  "picul> "t af ,july #ac1 #aiij w 2
  requir$ 0virtue (
--------------------------------------#c
  subsec;n #bh7#d.a7 69clude ! fair
  m>ket value ( s* 9v5tory 9 9come at t
  "picul> "t4 ,? provi.n may apply ":3
  7a7 a ,canadian resid5t c>ry+ on
    busi;s 9 ,canada 2comes non-resid5t
    & moves "s or all (! 9v5tory (!
    ,canadian busi;s 6ano!r c.try1
  7b7 a ,canadian resid5t c>ry+ on
    busi;s 9 ano!r c.try 2comes non-
    resid5t1 or
  7c7 a non-resid5t c>ry+ on busi;s 9
    ,canada moves "s or all (! 9v5tory
    (! ,canadian busi;s 6ano!r c.try4
  ,": ! am.ts 9clud$ 9 ! f>m]'s 9come "u
  subsec;n #bh7#d.a7 >e 9 respect (
  animals 9 a basic h]d1 an am.t may 2
  deduct$ f ! f>m]'s 9come "u sec;n #bi
  9 respect ( ^! animals4


                                      #f
             ,d1? (a ,f>m]           a#c
           7p>agraphs #f-aj7
    
#f4 ,": a f>m] :o det]m9es 9come us+ !
  ca% me?od dies & has an 9v5tory (
  live/ock1 ! value (! live/ock is a "r
  or ?+ = purposes ( subsec;ns #gj7#b7 &
  #gj7#c74 ,subsec;n #gj7#b7 requires !
  legal repres5tative ( s* a dec1s$ f>m]
  69clude ! value ( live/ock at d1? 9 !
  dec1s$ f>m]'s 9come tax return =! ye>
  ( d1? or elect 6file a sep>ate return
  69clude ! value ( all ! dec$5t's "rs
  or ?+s 79clud+ live/ock7 & pay tax
  "!on =! tax,n ye> 9 : ! f>m] di$ z if
  ! f>m] 7 ano!r p]son4 ,subsec;n
  #gj7#b7 w n apply 0virtue ( subsec;n
  #gj7#c7 9 respect ( live/ock t is
  transf]r$ or 4tribut$ 6! b5efici>ies
  2f ! "t = mak+ an elec;n "u subsec;n
  #gj7#b7 has expir$4 ,subsec;n #gj7#c7
  al provides t on ! subsequ5t r1liz,n
  or 4posi;n (! live/ock 0! b5efici>ies1
  ! proce$s w 2 9come 6!m4 ,! legal
  repres5tative may1 9 -put+ 9come    #g
              ,,it-#dbg;,r           b#c
  =! dec1s$ &! b5efici>ies1 9clude an
  am.t =! value ( "p (! h]d ( live/ock 9
  ! return ( 9come (! dec1s$ =! ye> (
  d1? "u subsec;n #gj7#b7 & 6transf] or
  4tribute ! rema9d] 6! b5efici>ies s t
  subsec;n #gj7#c7 applies4 ,pl1se ref]
  6! curr5t v].n ( ,,it-#bab1 ,9come (
  ,dec1s$ ,p]sons--,"rs or ,?+s1 = fur!r
  details on subsec;ns #gj7#b7 & 7#c74
#g4 ,an example (a situ,n ": ! appor;n;t
  ref]r$ 6in #f abv may 2 advantage\s is
  z foll[s3
--------------------------------------#d
  7a7 ,! dec1s$'s 9come =! "p
    ye> prior 6d1? """"""" 4#aj1jjj loss
  7b7 ,fair m>ket value (
    live/ock at ! date ( d1? "" 4#ej1jjj
  7c7 ,! dec1s$'s legal
    repres5tative wi%es
    6transf] ! live/ock 6!
    b5efici>ies "u subsec;n
    #gj7#c71 b al wi%es
    6utilize ! 4#aj1jjj loss !
    dec1s$ has 9curr$ 9 ! "p          #h
              ,,it-#dbg;,r           a#d
    ye> prior 6d1? &! dec1s$'s
    non-refunda# p]sonal tax
    cr$its
  
,solu;n3
  ,! value ( live/ock equal to1 4#aj1jjj
  plus an am.t su6ici5t 6utilize !
  p]sonal tax cr$its (! dec1s$1 is
  9clud$ 9 ! dec1s$ f>m]'s return (
  9come =! ye> ( d1? z a "r or ?+ "u
  subsec;n #gj7#b74 ,! live/ock n 9clud$
  9 ! value "u subsec;n #gj7#b7 is
  transf]r$ 6! b5efici>ies "u subsec;n
  #gj7#c7 &1 on ! subsequ5t r1liz,n or
  4posi;n (! live/ock1 ! proce$s w 2
  9come 6!m4

#h4 ,": "u subsec;n #gj7#b7 ! 9v5tory (
  live/ock1 9clud+ a basic h]d1 is a "r
  or ?+ on ! d1? (a f>m]1 ! valu,n "d
  value (! basic h]d t rema9s on h& at !
  "t ( d1? may 2 deduct$ f ! value (
  live/ock 9clud$ z a "r or ?+4 ,9 s*
  cases1 p>agraph #fi7#a77c7 is       #i
              ,,it-#dbg;,r           b#d
  applica# 6deem ! b5efici>ies 6acquire
  ! h]d at fair m>ket value at ! "t (
  acquisi;n4 ,! fair m>ket value is
  norm,y ! value us$ 9 -put+ ! 9come (!
  dec1s$ "u subsec;n #gj7#b74 ,!
  b5efici>ies >e n1 h["e1 p]mitt$ a
  basic h]d deduc;n "u sec;n #bi =!
  9h]it$ live/ock4
#i4 ,if subsec;n #gj7#c7 is applica# 6!
  transf] ( live/ock f a dec1s$ f>m]1 !
  dec1s$ w n 2 subject 6tax 9 respect (!
  live/ock4 ,! am.t rcvd 0"o (!
  b5efici>ies or o!r p]sons b5efici,y
  9t]e/$ 9 ! e/ate or tru/ ^u r1liz,n or
  4posi;n (! h]d or "p (! h]d w 2 9clud$
  9 -put+ 9come =! tax,n ye> 9 : x 0
  rcvd4 ,! co/ 6! b5efici>y (! h]d =!
  purpose ( subsec;n #gj7#c7 is describ$
  9 subsec;n #fi7#a.a7 z an am.t equal
  6! dec1s$'s co/ t has n be5 deduct$ 0!
  dec1s$ 9 -put+ 9come plus any
  exp5ditures made or

                                     #aj
              ,,it-#dbg;,r            #e
  9curr$ 0! b5efici>y 6acquire ! h]d4
  ,s9ce ! co/ ( live/ock (a f>m] us+ !
  ca% me?od1 wd1 except =! basic h]d1 h
  be5 deduct$ 0! dec1s$ 9 "s ye>1 ! co/
  (! live/ock 6! b5efici>y wd norm,y 2
  nil4 ,9 ! case (! basic h]d1 ! co/ 6!
  b5efici>y w 2 3sid]$ 6be an am.t equal
  6! fair m>ket value at ,decemb] #ca1
  #aiga (! basic h]d m9us ! am.ts
  previ\sly deduct$ 0! dec1s$ pursuant
  6sec;n #bi4
#aj4 ,! op;nal 9v5tory adju/;t &!
  m&atory 9v5tory adju/;t m5;n$ 9 #c abv
  d n apply 9 a ye> 9 : a f>m] di$4

        ,gift ( ,live/ock & o!r
        ,9v5tory 7p>agraph #aa7
    
#aa4 ,= tax,n ye>s & fiscal p]iods 5d+
  af #aiij1 ": 9v5tory is acquir$1 9
  circum/.es ": p>agraph #fi7#a77a7 or
  7c7 applies1 0a f>m] :o det]m9es 9come
  us+ ! ca% me?od1 ! acquir$ 9v5tory is
  deem$ 0virtue ( subsec;n           #aa
              ,,it-#dbg;,r           a#e
  #bh7#a.a7 6h be5 pur*as$ & pd =4 ,!
  f>m] is "!=e all[$ 6deduct ! fair
  m>ket value (! 9v5tory & is requir$
  63sid] s* acquir$ 9v5tory z pur*as$
  9v5tory =! purposes (! m&atory 9v5tory
  adju/;t 7see #c abv74 ,= tax,n ye>s &
  fiscal p]iods 5d+ 2f #aiia1 ! ,de"p;t
  w 3t9ue xs practice ": a f>m] gifts
  live/ock 9v5tory 6a *4 ,": s* a * rcvg
  ! prop]ty uses ! live/ock 9 ! busi;s (
  f>m+ & -putes 9come us+ ! ca% me?od1 !
  * w 2 3sid]$ 6h made a pay;t =!
  live/ock equal 6t fair m>ket value &
  3sequ5tly may deduct ? am.t "u
  p>agraph #bh7#a77e74 ,if ! recipi5t (!
  9v5tory does n elect 6use ! ca% me?od1
  ! fair m>ket value (! live/ock w 2
  tr1t$ z 9v5tory4 ,a f>m] :o 4poses (
  9v5tory 9 circum/.es ": p>agraph
  #fi7#a77b7 applies is requir$ 69clude
  ! fair m>ket value ( s* 9v5tory 9
  9come4

                                     #ab
        ,rollov] ( ,live/ock 6a      b#e
      ,corpor,n 7p>agraphs #ab-ad7
    
#ab4 ,a f>m] us+ ! ca% me?od 6-pute
  9come f a f>m+ busi;s may elect 6roll
  ov] 9v5tory [n$ 9 3nec;n )! f>m+
  busi;s 6a corpor,n "u subsec;n
  #he7#a74 ,": s* a f>m] 4poses (
  9v5tory [n$ 9 3nec;n ) t busi;s 6!
  corpor,n1 p>agraph #he7#a77c4#b7
--------------------------------------#f
  w apply = 4posi;ns o3urr+ af ,july
  #ac1 #aiij4 ,p>agraph #he7#a77c4#b7
  re/ricts ! selec;n (! deem$ proce$s (
  4posi;n (! f>m] &! co/ 6! corpor,n 9
  respect ( pur*as$ 9v5tory (! f>m] 6an
  am.t t is ! a7regate (
  7a7 ! propor;n (! am.t t wd h be5
    9clud$ "u p>agraph #bh7#a77c7 9
    -put+ ! f>m]'s 9come1 if ! f>m]'s
    tax,n ye> _h 5d$ at ! "t (! 4posi;n1
    t ! value (! pur*as$ 9v5tory 4pos$ (
    is (! value ( all pur*as$ 9v5tory
    [n$ 0! f>m] at t "t1 &
                                     #ac
              ,,it-#dbg;,r           a#f
  7b7 s* a4i;nal am.t z ! f>m] &
    corpor,n may designate1 n exce$+ !
    excess (! fair m>ket value (!
    pur*as$ 9v5tory 4pos$ ( ov] ! am.t
    describ$ 9 7a7 abv4
  ,! am.t select$ may al 2 re/rict$
  0p>agraph #he7#a77b74
#ac4 ,subp>agraph #he7#a77c4#b77;ii7
  5sures t ! f>m] w 2 requir$ 69clude !
  deem$ proce$s ( 4posi;n 9 9come "u
  subp>agraph #bh7#a77a77;i74 ,on ! o!r
  h&1 subp>agraph #he7#a77c4#b77;iii7
  5sures t ! corpor,n w 2 5titl$ 6deduct
  ! deem$ co/ (! 9v5tory "u subp>agraph
  #bh7#a77e77;i7 ": ! corpor,n -putes xs
  9come us+ ! ca% me?od & w 2 requir$
  63sid] s* 9v5tory z pur*as$ 9v5tory =!
  purpose (! m&atory 9v5tory adju/;t
  7see #c abv74
#ad4 ,a f>m] :o has a basic h]d may al
  elect 6roll ov] ! basic h]d 6a
  corpor,n "u subsec;n #he7#a74 ,! f>m]
  w 2 p]mitt$ a deduc;n calculat$ "u
  sec;n #bi 9 ! ye> (! rollov] (!    #ad
              ,,it-#dbg;,r           b#f
  basic h]d4 ,! basic h]d is tr1t$ z
  normal pur*as$ live/ock 9v5tory 9 !
  h&s (! corpor,n : rcvs x & subp>agraph
  #he7#a77c4#b77;iii7 w apply if bo? !
  f>m] &! corpor,n det]m9e _! 9come "u
  sec;n #bh4

      ,amalgam,n ( ,f>m ,corpor,ns
             7p>agraph #ae7
    
#ae4 ,an amalgamat$ corpor,n f an
  amalgam,n o3urr+ af #aihh acquires1
  0virtue ( p>agraph #hg7#b77b71 !
  9v5tory (a pr$ecessor corpor,n t has
  us$ ! ca% me?od prior 6! amalgam,n at
  a co/ equal 6! am.ts1 if any1 9clud$ 9
  -put+ ! pr$ecessor corpor,n's 9come "u
  bo? p>agraphs #bh7#a77b7 & 7c7 9 xs
  la/ tax,n ye>4 ,": ! amalgamat$
  corpor,n al -putes xs 9come "u ! ca%
  me?od1 ! co/ (! 9v5tory w 2 deem$ 6be
  an am.t pd 0! amalgamat$ corpor,n4 ,!
  amalgamat$ corpor,n w 2 5titl$ 6deduct
  ! co/ (! 9v5tory "u p>agraph       #ae
              ,,it-#dbg;,r           c#f
  #bh7#a77e7 & is requir$ 63sid] s*
  acquir$ 9v5tory z pur*as$ 9v5tory =!
  purpose (! m&atory 9v5tory adju/;t
  7see #c abv74

       ,w9d+-up ( ,f>m ,corpor,ns
             7p>agraph #af7
    
#af4 ,subsec;n #hh7#a.f7 applies 6a
  w9d+-up -m5c+ af ,july #ac1 #aiij 9
  circum/.es 6: subsec;n #hh7#a7 applies
  & ": ! corpor,n 7subsidi>y7 t is w.d-
  up us$ ! ca% me?od4 ,! subsidi>y's co/
  am.t immly 2f ! w9d+-up ( pur*as$
  9v5tory 4tribut$ 6! p>5t is ! a7regate
  (
  7a7 ! propor;n (! am.t t wd h be5
    9clud$ "u p>agraph #bh7#a77c7 9
    -put+ ! subsidi>y's 9come if xs
    tax,n ye> _h 5d$ at ! "t (! w9d+-up
    t ! value (! pur*as$ 9v5tory 2+
    4tribut$ 6! p>5t is (! value ( all
    pur*as$ 9v5tory [n$ 0! subsidi>y at
    t "t1 &                          #af
              ,,it-#dbg;,r           d#f
  7b7 s* a4i;nal am.t z ! subsidi>y may
    elect1 n exce$+ ! excess (! fair
    m>ket value (! 4tribut$ pur*as$
    9v5tory ov] ! am.t describ$ 9 7a7
    abv4
  ,! co/ am.t (! 9v5tory is 9clud$ 9 !
  subsidi>y's 9come "u #bh7#a77a74 ,": !
  p>5t al -putes xs 9come "u ! ca%
  me?od1 ! co/ am.t (! 9v5tory w 2 deem$
  6be an am.t pd 0! p>5t4 ,! p>5t w 2
  5titl$ 6deduct ! co/ am.t (! 9v5tory
  "u p>agraph #bh7#a77e7 & is requir$
  63sid] s* 9v5tory z 9v5tory pur*as$ at
  ! "t x 0 acquir$ =! purpose (! m&atory
  9v5tory adju/;t 7see #c abv74

  ,if y h any -;ts reg>d+ ! matt]s
4cuss$ 9 ? bullet91 pl1se s5d !m to3





                                     #ag
              ,,it-#dbg;,r           e#f
  ,director1 ,te*nical ,public,ns
    ,divi.n
  ,legislative & ,9t]gov]n;tal ,a6airs
    ,bran*
  ,rev5ue ,canada1 ,tax,n
  #hge ,h]on ,road
  ,ottawa1 ,ont>io
  ,k#a;,a #j;,l#h
  














                                     #ah