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NZ Tax Judgment A Concern For Industry Investment
Still in New Zealand, the High Court's dismissal of a bloodstock syndicate's challenge to an Inland Revenue decision around write-downs on a colt's purchase price sends a message to the thoroughbred industry, reports stuff.co.nz. The five plaintiffs were members of the unincorporated Te Akau Stallion Syndicate managed by Waikato's Te Akau Stud owner David Ellis who challenged income tax assessments disallowing their share of write-downs or reductions of the $550,000 (plus GST) purchase price of a colt named Roman Gladiator in the 2008 and 2009 income years. The colt was purchased as a stallion prospect but he was gelded in October 2009. The judge, Justice Brewer, dismissed the plaintiff's challenge on the basis that, while he did believe there was a 'racing' business, they "did not carry on a bloodstock breeding business." Consequently they were not permitted to claim tax deductions associated with the colt's purchase. Tax expert Greg Harris said the dismissal of the case sends the message that any business, regardless of the industry it operates in, needs to develop a comprehensive business plan at the outset. He commented the decision could have an impact on the bloodstock industry by creating a different standard for the owners of a stallion compared with that for a breeding mare. Syndicate spokesman David Ellis advised no decision had yet been made whether to appeal.