29 March 1999 External T.I. 9817825 - SPECIFIED ANIMALS

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Are bison, elk, deer, alpaca, ostriches, lamas, boar goats "specified animals" for purposes of subsection 28(1.2) of the Act?

Position: Bison, yes. The other listed animals - no.

Reasons: "Specified animals" include horse and bovine animals registered under the Animal Pedigree Act. The above listed animals, with the exception of bison, are not considered bovine animals.

XXXXXXXXXX 	5-981782
		Karen Power, CA
Attention:  XXXXXXXXXX 

March 29, 1999

Dear Sirs:

Re: “Specified Animals”

We are writing in reply to your letter of July 2, 1998 requesting our views on whether bison, elk, deer, alpaca, ostriches, lamas and boer goats would be considered “specified animals” for purposes of subsection 28(1.2) of the Income Tax Act (the “Act”).

Our Comments

Paragraph 5 of Interpretation Bulletin IT-526 states that generally, inventory for purposes of the mandatory inventory adjustment will be valued in accordance with subsection 28(1.2) of the Act at the lesser of a) the amount paid by the farmer to acquire the inventory and b) its fair market value.

Subsection 28(1.2) of the Act, also provides that a farmer may choose to value a “specified animal”, in the year of acquisition, at 70% of its cash cost or at a greater amount not exceeding its cash cost. In a subsequent year, the specified animal may be valued at 70% of the total of its value determined under subsection 28(1.2) of the Act at the end of the preceding year and any increase in the cash cost of the animal in the year or a greater amount not exceeding its cash cost.

A “specified animal” is defined in subsection 28(1.2) of the Act to include horse and bovine animals registered under the Animal Pedigree Act if the farmer so elects. Bovine is the common term for animals in the Bovinae subfamily of the Bovidae family, which in turn belongs to the class of Mammalia. A reference to bovine animals would include all domestic cattle, bison, water buffalo, and yak. It does not include other common domestic livestock within the taxonomic family Bovidae such as domestic sheep, goats (including boer goats), or muskox. It also does not include animals of other taxonomic families such as Cervidae (deer, elk, and caribou), Camelidae (llama and alpaca), Suidae (pigs), Equidae (horses), or ostriches, which belong to another class of animals.

Revenue Canada’s responsibility is limited to the interpretation of the Act. The Act would have to be amended in order to include the above-noted livestock in the definition of “specified animals.” As tax policy issues and amendments to the Act are the responsibility of the Department of Finance, any changes to the definition of “specified animals” would have to be considered by them.

We trust our comments will be of assistance to you.

Yours truly,

Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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