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Bees and tax

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'Lets say you purchased a breeder queen for say $1000 and it died.

Or possibly a nuc for this matter.

Can your Accountant claim the loss.

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Explain what you mean? You've already claimed the expense of the purchase, whether they live or die.... are you talking about something else?

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When you buy a work car for example, it is an asset purchased with surplus or borrowed money.

You cannot claim it as an expense, but can claim the expenses incurred.

With a car there are many expenses, one of which is depreciation.

As the car ages it loses value and that lost value goes against the profit you make that year .

eg. If the car devalues by $2000 in a financial year then that is a cost that reduces your profit by $2000.

If you write the car off without insurance then it is a total loss of the entire value.

That is another expense.

When you buy bees they are assets not expenses. ( Not sure but logical)

When they die before they have been depreciated to their end of useful live value, (0) , that represents an expense

Income minus expenses = Gross Profit.

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Bees will be in the same category as any other livestock I would have thought. Where are all of our cockies when you want one ?

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The part where I state (not sure but logical) is in fact the basis of my posted question.

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Bees will be in the same category as any other livestock I would have thought. Where are all of our cockies when you want one ?

Thats what I reckon Pink Cat.

I ran it by my Accountant and he was a bit stumped.

He will give me and answer and an invoice but am keen to hear what others have to say.

One thing he did say was that livestock are tagged and identifiable so queens that are numbered will almost certainly be livestock I imagine.

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So do IRD produce values for boxes of insects. A cow is a cow and they set values each year. So what is the revenues value for a hive or nuc. If you increase no by 50 hives at $500 that would be an unrealized but taxable profit in the world of cattle. Any commercial know the answer?

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Insects are not at the bottom of the financial pile, There is and industry breeding surgical leeches, edible snails and probably tanks of bacteria

I bet if a cleaner dropped a bottle of janola into the bacteria tank, that would represent a significant loss for someone.

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Thats what I reckon Pink Cat.

I ran it by my Accountant and he was a bit stumped.

He will give me and answer and an invoice but am keen to hear what others have to say.

One thing he did say was that livestock are tagged and identifiable so queens that are numbered will almost certainly be livestock I imagine.

Hahaha just had a vision of a dairy farmer checking his paddock and finding his prize cow had been superceded. Or had swarmed off next door.

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Hahaha just had a vision of a dairy farmer checking his paddock and finding his prize cow had been superceded. Or had swarmed off next door.

Possibly down south where the water is dicky

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So if they swarm do i get to claim a loss, half the hive and does the recipient (@yesbut ) get to pay tax on the equivalent gain?

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Bees are not on the list of scheduled livestock where you value them at national market value or national standard cost. You would claim the purchase of the queen as an expense at the time of purchase and no further claim if it died.

 

The general rule for the purchase of hives would go into your fixed assets and you would depreciate them at 16% pa. If you replace old/broken ones you could expense them or add them to assets and writeoff the old one, which would be a nightmare trying to identify which one was to be written off. Any additionalnew hives would be added to assets, however there is the section in the Income Tax Act that allows you to write off assets under $500 so you could try buying them 1 at a time and see what your accountant says. I'm a hobbyist so I can't claim anything but on the other hand if I "sell" any honey I won't need to return it for income tax.

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I read a book called The Beekeeper Lament recently and it had a section on theft of hives from the California Almonds. The commercial the book was about said that when they catch a thief they are charged for the theft of the equipment, not the bees, it is almost impossible to legally prove the bees are the same. So in the US you legally own the equipment and you encourage bees to live in it.

 

I'm not sure if the author may have misinterpreted what the commercial guy said, if I've misinterpreted, or if correct, if the US law is similar to our law.

 

Too bad lots of the commercials are out pollinating at the moment and not here to answer a few questions!

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bees are a liability, not an asset ;)

But seriously, your breeder would be an expense, not an asset.

Thankfully bees are not generally treated as livestock, imagine all the wandering stock complaints.

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makes no sense at all to try and depreciate something that has a useful life of one or two years, eg, a queen.

 

A colony makes no sense to depreciate as it is (barring failure) constantly renewing and does not have a definable useful lifespan.

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makes no sense at all to try and depreciate something that has a useful life of one or two years, eg, a queen.

 

A colony makes no sense to depreciate as it is (barring failure) constantly renewing and does not have a definable useful lifespan.

You have a point there deeJaycee

This logic is applied to aircraft taxation.

The airplane depreciates much more slowly than a car as it is continually being replaced with new parts.

This thread may be a little deeper than just what it may appear at face value.

There may be some Deer farmers reading this that remember when extraordinary sums of money were pumped into the industry when the Govt manipulated the taxation status of Deer.

It appears that bees which are in Effect livestock enjoy what was a brief taxation break that built the Deer farming industry.

If Im correct then it is possible that the price of bees may not of peaked yet.

At one point a wild deer straight from the bush was worth $3000.

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For those who have been bee keeping for a long time and someone asks you how is that first beehive you started with is going you would say it is still working great. I have only had to replace the frames 10 times, the boxes 5 times and the base twice but it is still the same hive.

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Just like my grandfathers axe.

One real positive is that as bees increase in value so does the value of the skilled people that serve the industry.

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Taxation and beehives is a very complicated subject and one that I by no means fully understand. One thing is absolutely clear. If you sell honey then you must pay tax on your income after expenses. There is no minimum amount but I have been told you would be unlikely to be chased for an amount of less than $500. It also pays to remember that if you use all your profit to buy more beekeeping gear and increase your numbers then this is not regarded as an expense. It is possible to depreciate your hives but if you do when you sell them you will have to pay tax on the difference between their book value and the purchase price. I don't know what the tax situation is if someone neglects their hives such as the case years ago when 1000 of 1000 hives were burnt for disease. It is obviously a huge loss but then the value of 1000 neglected and diseased hives is effectively less than zero.

A few years ago a lot of hobbyists in Hawke's Bay ended up with some quite big tax bills that they weren't expecting.

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Hahaha just had a vision of a dairy farmer checking his paddock and finding his prize cow had been superceded. Or had swarmed off next door.

You don't want to be in charge of a herd of cows when one of the top producing cows dies...I wouldn't wish that on anyone :cry::(

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My accountant is going to decide in march as to what my situation is hobbyist or in business...all the hives I sold this season were paid for by Internet banking none of the hard to hang on to lump under the mattress stuff. Accountant said the best thing to do now was to put the spade in the ground and if anyone starts looking at what I'm doing (IRD) the process has started.

I've already more than doubled the number of hives I have...:whistle: :bee:

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Taxation and beehives is a very complicated subject and one that I by no means fully understand. One thing is absolutely clear. If you sell honey then you must pay tax on your income after expenses. There is no minimum amount but I have been told you would be unlikely to be chased for an amount of less than $500. It also pays to remember that if you use all your profit to buy more beekeeping gear and increase your numbers then this is not regarded as an expense. It is possible to depreciate your hives but if you do when you sell them you will have to pay tax on the difference between their book value and the purchase price. I don't know what the tax situation is if someone neglects their hives such as the case years ago when 1000 of 1000 hives were burnt for disease. It is obviously a huge loss but then the value of 1000 neglected and diseased hives is effectively less than zero.

A few years ago a lot of hobbyists in Hawke's Bay ended up with some quite big tax bills that they weren't expecting.

 

So if you buy new gear to replace old gear that is not an expense?

So how do you grow without deducting costs for new gear?

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So if you buy new gear to replace old gear that is not an expense?

 

Buying new assets is not an expense. They are paid for out of tax paid profit. You do get to claim depreciation. Unless the purchase is under $500.00 incl gst in which case you can claim the whole amount as an expense.

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But surely boxes, frames, wire and foundation are consumables?

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