Government Moves to Strengthen Racing Industry with GST Policy Review

To address this issue, the government is proposing a pragmatic solution that allows current practice to continue, preventing unnecessary compliance costs.

The New Zealand government is preparing to launch a public consultation on proposed GST policy changes aimed at making the country’s racing industry more competitive, Racing Minister Winston Peters has announced.

“The racing industry makes an important economic contribution. New Zealand thoroughbreds are in demand overseas as racehorses and for breeding. The domestic thoroughbred industry injected nearly a billion dollars into the economy in 2022/23,” Mr. Peters said.

Proposed GST Changes to Ease Compliance Burden

Bloodstock breeders often form joint ventures to co-invest in thoroughbreds, sharing the purchase price and ongoing costs. A common practice has been for each investor in the joint venture to individually claim GST deductions in their own GST returns.

However, Inland Revenue recently ruled that existing tax laws do not allow this, requiring breeders to register and file separate GST returns for each horse. This change would impose additional compliance costs and administrative burdens on breeders.

“To comply with this, breeders would incur the compliance cost of registering and filing GST returns for each horse separately every month or every two months,” Mr. Peters explained.

To address this issue, the government is proposing a pragmatic solution that allows current practice to continue, preventing unnecessary compliance costs.

“If this proposal proceeds, it will place the New Zealand industry on a more equal footing with the Australian industry,” Mr. Peters said.

Industry Growth and Strong Sales at Karaka

The consultation document is expected to be published in the coming months on taxpolicy.ird.govt.nz, allowing stakeholders to provide feedback on the proposed changes.

In addition to the policy announcement, Mr. Peters congratulated New Zealand Bloodstock on the completion of the 99th National Yearling Sales at Karaka, which recorded an impressive $86 million in total sales.

A standout moment from the sales event was the record-breaking $2.4 million paid for a filly sired by Savabeel—the highest price ever paid for a filly in New Zealand.

“The sales show the New Zealand bloodstock industry is in good health and the industry presents major potential for growth both domestically and through international interest,” Mr. Peters noted.

With these proposed GST changes and continued strong demand for New Zealand thoroughbreds, the government is taking steps to ensure the racing and breeding sector remains globally competitive while reducing compliance costs for industry participants.