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29th October 2006

NZ Bloodstock Taxation – the new write downs and the business test
By John Aubrey
Published by the NZTBA: http://www.nzthoroughbred.co.nz/

John is a chartered accountant based in Hamilton, and was previously a senior partner in Coopers & Lybrand. He served for eight years on the NZTBA Council, including a term as president, and gave a total of 30 years’ service to the Council and the Waikato branch committee. The author of Bloodstock Taxation in New Zealand (2002), John’s work in this field with successive governments has been of immense benefit to New Zealand owners and breeders.

The following is based on a presentation John made to the NZTBA branch representatives’ meeting on 19 July 2006 and has been approved for publication by him. He welcomes professional inquiries from accountants on phone (64 7) 838 1014.

The New Bloodstock Write Downs – An Overview

On 10 March 2006 the Minister of Racing Rt Hon Winston Peters, announced major legislative changes for the racing industry, including:

A decrease in the write down period for stallions from 4 years to 2 years.

A decrease in the maximum write down period for broodmares from 8 years to 5 years (or 6 years for those few broodmares that commence breeding at age 2). Broodmares that commence breeding at age 8 and over will be written off in full in the first year of breeding.

These changes, along with a reduction in totalisator duty from 20% to 4% of gambling profits, have subsequently been confirmed by legislation, and take effect from 1 August 2006.

These rules, old and new, apply only to New Zealand taxpayers.

New Stallion Write Down Rates

Calculated on the cost price 50% write down for two years.

Alternatively, on reducing value 75% on reducing value each year. This is a significant change from 37.5% on reducing value.

The above rates apply only to stallions bought or brought into breeding on or after 1 August 2006 that have not previously been used for breeding in New Zealand. Otherwise, the basic write down is 20% for five years.

New Broodmare Write Down Rates

Effective from 1 August 2006

Applies across the board to any mares purchased or retired to stud: imported mares, maiden mares, or mares that have previously been to stud.

Mares will now be fully written off by age 9.

Mares aged 8 or over qualify for a 100% write down.

The 25% loading still applies for eligible mares – basically, mares not (previously) used for breeding in New Zealand by any other person. This includes maiden mares and mares imported to New Zealand for the first time.

Further information from:

New Zealand Thoroughbred Breeders’ Association
Private Bag 99908, Newmarket, Auckland, New Zealand
Telephone: 64 9 525 2428 Fax: 64 9 525 2434