The first tax issue to consider with owning a racehorse is whether you are operating as a hobby or a business. Generally, it is difficult to demonstrate to the ATO that you have a racing business unless it is associated with breeding or training activities and is of significant scale.
The taxation benefits of owning a racehorse(s) as a hobby include:
- All winnings are not taxable, i.e., they don’t form part of your assessable income.
- Non-residents are not taxed on any capital gains made.
- Horses owned for more than 12 months receive the 50% Capital Gains Tax (CGT) discount on sale.
- CGT exemption applies if the horse, or share in the horse, costs $10,000 or less.
- Racehorses (as personal use assets) do not form part of the small business CGT concession 'net assets' calculation.
- Normal capital losses can be offset against a capital gain on a racehorse sale.
The taxation benefits of owning a racehorse(s) as a business:
- Refund of the GST on buying racehorses and associated business costs.
- Tax deductions from conducting a racing business.
- Small business CGT concessions apply.
If you would like to discuss further please contact us:
McNamara & Company - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com
Please refer to disclaimer at the bottom of the page.
