Can a Racehorse Beat the ATO?

Can a Racehorse Beat the ATO?


The first tax issue to consider with owning a racehorse is whether you are operating as a hobby or a business. Generally, it is difficult to demonstrate to the ATO that you have a racing business unless it is associated with breeding or training activities and is of significant scale.

The tax benefits of owning a racehorse(s) as a hobby include:

  • All winnings are not taxable. 
  • Non-residents are not taxed on any capital gains made.
  • Horses owned for more than 12 months receive the 50% CGT discount on sale.
  • Capital gains tax exemption applies if the horse, or share in the horse, costs $10,000 or less.
  • Racehorses (as personal use assets) do not form part of the small business CGT concession ‘net assets’ calculation.Normal capital losses can be offset against a capital gain on a racehorse sale.

The tax benefits of owning a racehorse(s) as a business:

  • Refund of the GST on buying racehorses and associated business costs.
  • Tax deductions from conducting a racing business.
  • Small business CGT concessions apply.

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