Accounting for Agrifunder Livestock
This information has been created to help Operators and their accountants with the accounting and GST practices related to their transactions with Agrifunder.
Agrifunder does not provide accounting, tax or legal advice. This material has been prepared for informational purposes only and it is not intended to be used as a substitute for professional advice.
Operator and Agrifunder relationship
- Once executed by the Operator and Agrifunder, the Operating Contract formalises the relationship between each party with the Operator purchasing livestock ‘as agent for Agrifunder’.
Ownership of the livestock
- Agrifunder settles the invoice on behalf of the Operator and takes ownership of the livestock.
Accounting for livestock
- Agrifunder owns the livestock, therefore livestock are not recorded on the Operator’s balance sheet as an asset.
- There is also no livestock loan to account for or a need to account for the value of the livestock or changes to those values in the Operator’s accounts.
- During the finance term there is also no interest charge to account for.
Agrifunder purchases the livestock and accounts for the GST. The producer does not account for any GST when the livestock are purchased from a third party.
Purchasing livestock that are already on the property
- Agrifunder is able to purchase livestock directly from producers. Note, the sale of livestock to Agrifunder is a leviable transaction and the Operator is responsible for paying the levy. Further information about levies can be found here: https://www.agriculture.gov.au/ag-farm-food/levies/rates#livestock-transaction
- The Operator should provide a tax invoice to Agrifunder detailing the agreed purchase price and GST.
- Alternatively Agrifunder can provide a Recipient Created Tax Invoice (RCTI) to the Operator which details the agreed purchase price, GST and the total amount that will be transferred to the Operator.
• It is the Operators responsibility to remit GST from the sale of livestock to the ATO.
• The Operator arranges the sale of the livestock.
• Agrifunder receives the proceeds from the sale of the livestock. The purchase price and finance costs are deducted from the proceeds, and the remaining margin is then passed on to the Operator.
• Agrifunder will issue a RCTI when the livestock are sold and the funds have been received. The RCTI will account for the sale proceeds, original purchase price, finance costs and GST. The RCTI provides the Operator all the information required to record the transaction in their accounting system
• The Operator margin is calculated exclusive of GST. The Operator margin is paid inclusive of GST.
• The Operator receives the margin which is recorded as taxable income.
• It is the Operator’s responsibility to remit GST on the Operator margin.
Other repayment options
• Operators can also repay Agrifunder livestock via cash repayment or via purchasing the livestock from Agrifunder.
• A cash repayment by a producer can be used to reduce the value owing against livestock. Agrifunder retains title of the livestock.
• A RCTI will be provided to the Operator
Purchasing livestock from Agrifunder
• An Operator can choose to purchase livestock from Agrifunder. Most Operator livestock purchases from Agrifunder will involve a levy due to the transfer of title of the livestock from Agrifunder to the Operator. The levy is calculated on a per head basis and added to the purchase price of the livestock as outlined in the RCTI sent by Agrifunder to the Operator. Further information about levies can be found here: https://www.agriculture.gov.au/ag-farm-food/levies/rates#livestock-transaction
• It is the Operator’s responsibility to account for GST on cash repayments or purchasing livestock from Agrifunder.
Reporting for the Operator
• The Operator will receive a contract with each purchase and RCTI on sale of livestock. Additionally, the Operator can request annual or periodic reports to support general performance analysis and input to the Operator’s end of year accounts.
• Mortality of the animals is the responsibility of the Operator. Any mortality will be taken into account when calculating the payment of the Operator’s margin.