Inland Revenue has released the price yearlings must be sold for at this year’s Karaka Yearling sales so they can be considered as ‘standouts’ and possibly eligible for tax deductions.
In 2018 the Government announced its policy that allows new investors, who purchase standout yearlings with the intention to breed them for profit, to be able to claim tax deductions as if they had an existing bloodstock breeding business.
Investors will also be taxable if the standout yearling is subsequently sold for a profit.
To qualify for tax deductions the standout yearling must be purchased at Karaka 2020 from Book 1 and cost more than $430,000 for fillies and $368,000 for colts.
To be eligible, investors have to provide Inland Revenue with evidence within 4 months of buying the yearling that they intent to derive a profit from breeding the high-priced filly or colt.
A yearling intended for breeding and purchased through a syndicate, or subsequently syndicated after Karaka 2020, also qualifies the new investor to claim income tax deductions under the policy.
Information Required when notifying the Commissioner of an intention to breed for profit
1. Notification of intention to breed.
2. Sale and Purchase documentation – (and, if not included in documentation, lot number/sale name/horse identification (colt/filly, dam/sire etc).
3. IRD/GST Number of the owner. If multiple owners (syndicate/partnership) details of the entity, including all owners individually.
4. Contact Details: Physical Address, phone number, E-mail address.
5. Balance date.
6. Owner’s founding documents (Syndicate/Partnership agreement).
7. Breeding business plan:
- A description of the business,
- The research undertaken/ previous knowledge,
- Location of activity,
- How is horse to get to breeding state? (how is horse to be raced/racing management?),
- Where and when is horse to commence breeding and who/how is this to be managed?
- Financial forecasts , • Involvement of racing/breeding/syndicate manager (overall management of horse).
8. Veterinarian reports:
- For syndicates required to operate in accordance with the “Bloodstock Syndication Code of Practice”, a copy of the veterinarian certificate obtained; and
- For all other syndicates, confirmation that an external physical examination was carried out by a veterinarian prior to purchase together with the details of the veterinarian who performed the examination.
9. Any other relevant communication within the syndicate prior to filing the application for a deduction for the cost of the high-priced bloodstock.
Please contact firstname.lastname@example.org should you have any questions.