Game farmers must prove they’re bona fide game farmers to access tax concessions. The South African Revenue Service (SARS) Practice Note 6 of 1999 states: “The same tests used to determine whether a person is carrying on ordinary farming operation are applicable for game farming.
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When a person who owns land and occasionally allows hunters, for example, to cull the game thereon, such activities cannot, on that account alone, be accepted as constituting farming with game. Such person will have to convince the Commissioner that game is purchased, sold, bred etc on a regular basis before the activities can be regarded as bona fide farming operations.”
Broadly, the tax concessions are similar. Capital allowances for a domestic livestock or crops farmer also apply to game farmers. Income from game hunting or the sale of carcasses, hides or trophies is “farming income”. But accommodation of hunters, for example, and all hospitality activities of the game farmer’s operation aren’t farming income. They’re classed separately.
Opening and closing accounts for domestic livestock are added back at the standard rates for the livestock, as provided in the Income Tax Act, at the end of each year. Game aren’t added back, because of the difficulty around accurate game counts. This creates another tax benefit for the game farmer. Wild animals are more mobile than domestic animals.
The purchase consideration of new wildlife stock would usually constitute a full deduction. But this expenditure is ring fenced in terms of Paragraph 8 to the first schedule of the Income Tax Act and the deduction is limited to farming income. If a portion of the purchase consideration for wildlife remains after year end, this excess is carried over to the next year to be offset against the farming income.
But for wildlife, where losses don’t arise from a sale or voluntary disposition, the limiting provisions of Paragraph 8 don’t apply (as per subparagraph 8(2) of the first schedule). So, where a game farmer shows involuntary losses that aren’t sale-related, these can be claimed as a tax deduction in the normal course.
Legally retrieving strayed game
It’s difficult to identify which animals belong to a certain farming operation, as game often stray. I’m often asked how game farmers can legally retrieve their game from an adjoining national park that neglects its fences. Common law states wild animals in a natural state of freedom become the property of their captor wherever captured.
A captor needs two things to take ownership of the animal – physical control of the animal and the desire to be its owner. If the animal is marked or tagged, it’s not in a “natural state of freedom” and its captor can’t own it by means of capture. The owner could then prove ownership and may legally demand the animal’s return.
This article was originally published on 26 November 2010 in Farmer’s Weekly.
