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Can a racehorse beat the Australian Taxation Office (ATO)?

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
Phone +61 3 9428 1062

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