Next steps for bloodstock investment
Rt Hon Winston Peters
Minister for Racing
17 October 2018 MEDIA STATEMENT
Racing Minister Winston Peters has announced the next steps to promote new investment in the horse bloodstock industry.
“Quality breeding is the life blood of the New Zealand racing industry. Better tax rules will encourage new investment in bloodstock breeding, and affirms the Government’s commitment to New Zealand’s racing industry to reach its full potential,” said Mr Peters.
“Cabinet has approved the final design of the bloodstock rules which were first signalled in Budget 2018.”
“Investors new to bloodstock breeding will be able to claim tax deductions for the cost of horses, even if they don't own an existing horse breeding business. We expect this will encourage new entrants as the industry becomes more financially attractive,” he said.
“In order to be eligible for tax deductions, new investors will have to provide Inland Revenue with evidence that they intend to derive a profit from breeding high quality bloodstock. This way we know that we’re incentivising genuine entrepreneurial activity that improves the quality of the industry’s stock,” said Mr Peters.
The amendments will be introduced by way of Supplementary Order Paper to the Taxation (Annual Rates for 2018-19, Modernising Tax Administration, and Remedial Matters) Bill which is currently being considered by a Parliamentary select committee.
The legislation will be enacted in early 2019. It will have a retrospective start date of 1 January 2019. This means it will apply retrospectively to yearlings acquired at the New Zealand National Yearling sales series at Karaka in January 2019.
From Size & Scope of the New Zealand Racing Industry (2018) and Statistics NZ (2015, 2016)
• The racing industry’s contribution to the New Zealand economy is over $1.6 billion.
• Over 58,000 individuals are involved in racing as employees, participants or volunteers.
• There are approximately 6,500 bloodstock breeders.
• Bloodstock exports from New Zealand earn in excess of $100 million a year
How will the policy work?
The policy focuses on investors new to the breeding industry. Existing breeders already benefit from tax concessions.
New investors would be entitled to claim tax deductions and be taxable on receipts as though they had a bloodstock breeding business, if they:
• purchase, from a New Zealand premier yearling sale, an interest in a yearling that has the qualities to be a future stud founding horse;
• notify the Commissioner of Inland Revenue of their intention to breed from the yearling for profit in the future and provide the owners’ details; and
• provide evidence as required by the Commissioner to support their stated intention, including a business plan.
The policy comes into effect from 1 January 2019 and is expected to cost about $4.8 million a year.
Why are the tax changes needed?
The Government’s aim is to encourage new investment in the New Zealand racing industry and ensure that New Zealand horses can compete with the best in the world. These changes are designed to attract more investment into bloodstock breeding.