Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Horse buyer Ellis blames IRD for bleeding bloodstock sales

David Ellis, Karaka’s biggest buyer, blames IRD for bleeding bloodstock sales

By Suze Metherell

Feb. 5 (BusinessDesk) – David Ellis, the biggest spender at New Zealand’s premiere Karaka horse sales this year, says the tax department is stifling new investment in the bloodstock industry with its interpretation of depreciation rules.

The value of yearling sales at Karaka in South Auckland have fallen in each of the past six years, reaching $69.7 million last month, down from $111.2 million in 2008. That’s below the average $83.9 million in the past seven sales. The number of catalogued horses has fallen 12 percent in that time and actual lots bought are down 18 percent.

Ellis, principle of Waikato-based Te Akau Racing stables, spent $6.8 million on 43 horses at Karaka last month, almost $3 million more than the second-largest buyer.

He was behind an investor syndicate that last year lost a High Court case against the Inland Revenue Department over depreciation on a colt that disappointed as a potential breeder and ended up being gelded. Ellis told BusinessDesk that IRD needs to take some of the blame for the decline in sales because of a lack of clarity over tax on horses bought for breeding

“It is so uncertain on what you can and can’t do, and this is a big statement from Karaka’s biggest buyer,” Ellis said.

“We are desperate as an industry for government to clarify tax issues, for example Michael Cullen increased depreciation on blood stock to encourage investment,” he said. “But the legislation is so unclear no one knows what to do.”

Investment syndicates, such as in the Ellis case, typically purchase a horse with the intention of breeding but to establish pedigree and reputation they first put it on the racing circuit. Last year’s High Court ruling held that because the syndicate had no previous breeding record IRD could disallow any deductions until foals had been sired.

“Whether that’s fair or not, no one is able to write off the costs unless they have a pre-existing breeding business,” Andrew Babbage, a tax partner at Deloitte, told BusinessDesk. Those deductions weren’t available to one-off syndicates, which would potentially bring in new investors.

“If you’re an existing breeder and you purchase a horse the purchase is preparatory to a breeding business, and the continuing of the established breeding,” Babbage said.

This year’s top price paid was $800,000 for a Cambridge Stud colt with blood lines from Fastnet Rock and Katie Lee, less than half the top price last year of $1.97 million for a Curraghmore Stud colt from Fastnet Rock and Celebria. The record price paid at Karaka was $3.6 million in 2000 for Don Eduardo, sired by Zabeel via Diamond Lover.

The clearance rate this year rose to 78 percent and the median price paid was $45,000.

Ellis, whose Te Akau Racing also has stables in Singapore, said the global economic downturn had also contributed to the tightening in sales, as had a high kiwi dollar against the Australian dollar.

“Naturally the Australians did not spend with the same freedom as in the past, but even given that, sales were still successful – with some alarm bells centred on fresh investment in the industry,” he said.

“New Zealand industry still had good results, for example at VRC Oaks (at Melbourne’s Flemington Racecourse) Kirramosa won that race,” he said. “We’ve won international races in Hong Kong, Singapore, Australia. The industry still performs well but could perform a lot better if we clarified the tax issues.”

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Keep Digging: Seabed Ironsands Miner TransTasman Tries Again

The first company to attempt to gain a resource consent to mine ironsands from the ocean floor in New Zealand's Exclusive Economic Zone has lodged a new application containing fresh scientific and other evidence it hopes will persuade regulators after their initial application was turned down in 2014. More>>

Wool Pulled: Duvets Sold As ‘Premium Alpaca’ Mostly Sheep’s Wool

Rotorua business Budge Collection Limited (Budge) and sole director, Sun Dong Kim, were convicted and fined a total of $71,250 in Auckland District Court after each pleading guilty to four charges of misrepresenting how much alpaca fibre was in their duvets. More>>

Reserve Bank: Labour Calls For Monetary Policy To Expand Goals

Labour's comments follow a speech today by RBNZ governor Graeme Wheeler in which Wheeler sought to answer critics who variously say he should stop lowering interest rates, lower them faster, or that inflation-targeting should no longer be the primary goal of the central bank's activities. More>>

ALSO:

BSA Extension And Sunday Morning Ads: Digital Convergence Bill Captures Online Content

Broadcasting Minister Amy Adams has today announced the Government’s plans to update the Broadcasting Act to better reflect today’s converged market... The Government considered four areas as part of its review into content regulation: classification requirements, advertising restrictions, election programming and contestable funding. More>>

ALSO:

March 2017: Commerce Commission Delays Decision On Fairfax-NZME

The Commerce Commission has delayed its decision on the proposed merger between NZME and Fairfax Media's New Zealand assets, saying the deal is complex and it needs more time to assess the impact on both news content and the advertising market. More>>

ALSO:

Plan Plan: Permanent Independent Hearings Panel Proposed For Planning

The Productivity Commission recommends creating a permanent independent hearings panel like the one that cut through local politics to settle Auckland’s Unitary Plan, for the whole country. More>>

ALSO:

Statistics: NZ Jobless Rate Falls To 5.1% Under New Methodology

New Zealand's unemployment rate fell more than expected in the second quarter as Statistics New Zealand adopted a new way of measuring the labour market to bring the country in line with international practices, and while a growing economy continued to support jobs growth. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news