This section provides information relating to common accounting and record keeping events in the racing industry.
These events include:
- issuing and receiving tax invoices
- accounting for monetary and non-monetary prizes
- imports
- exports
- auction sales.
Accounting for GST
There are two methods of accounting for GST - on a cash basis or on a non-cash basis. It is important that you are familiar with the accounting method you adopt when completing your activity statement.
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For more information on accounting for GST refer to:
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Tax invoices
Tax invoices are an important part of the GST system. To claim a GST credit you must be registered for GST and have a tax invoice (or recipient created tax invoice) for purchases that cost more than $82.50 (including GST).
If you make taxable supplies (for example, you are an owner supplying your horse to race), you must issue a tax invoice within 28 days if the recipient of your supply (such as a racing body) requests one. You should keep a copy of all tax invoices that you issue to help you prepare your activity statements.
If you are a racing body and you make sales to a participant (for example, an owner or trainer) for which you charge a fee, these sales should be included in a tax invoice you issue to the recipient. For example, you may provide entry into a race in exchange for nomination and acceptance fees. These charges will be included in the tax invoice that you issue to the owner of the racing animal.
Recipient created tax invoices
In certain circumstances, the racing body may issue you with a recipient created tax invoice (RCTI). These are tax invoices you receive for services you supply to the racing body.
Racing bodies may only issue RCTIs if:
- both you and the racing body are registered for GST at the time the RCTI is issued
- there is a written agreement between you and the racing body specifying the sales to which the agreement relates and agreeing that the racing body can issue the RCTI, and
- you, as the supplier, do not issue tax invoices for the sales specified in the agreement.
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If you are not required to be registered for GST (for example, your activities are a hobby), the racing body will issue you with details of the prize money you have won in a statement or remittance advice. This document is not an RCTI.
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Supplies you receive from a racing body (for example, entry into a race on payment of a nomination or acceptance fee) cannot form part of an RCTI the racing body issues to you. These supplies must be listed in a tax invoice issued by the racing body.
The types of supplies that may appear on an RCTI include supplies:
- of an animal to race for which prize money or an unplaced starter's rebate is paid to an owner
- by a trainer for which they receive their percentage of prize money, and
- by a jockey or driver for which they receive a riding/driver fee or their percentage of prize money.
Example
RCTI issued by racing body
Phil is registered for GST in relation to his racing activities. He enters a horse into a race and pays the nomination fee of $110. The horse wins the race and Phil receives prize money of $2,200. Both of these transactions occur within the same tax period and these are the only transactions for Phil in this tax period. Phil has an RCTI written agreement with the racing body.
Phil cannot issue a tax invoice for these transactions. The racing body will issue an RCTI and will separately identify the transactions. Phil must account for GST of $200, that is, one-eleventh of the $2,200 prize money. Phil is entitled to a GST credit of $10, that is, one-eleventh of the $110 nomination fee.
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There are other matters you may need to consider in relation to RCTIs.
For more detailed information, refer to GST ruling GSTR 2000/10 - Goods and services tax: recipient created tax invoices.
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Monetary prizes
If you are a GST-registered owner, lessee, trainer, driver or jockey, any monetary prizes paid to you by a racing body will be subject to GST.
Monetary prizes as payment for your supplies
If you are a GST-registered owner, lessee, trainer, driver or jockey making racing related supplies to a racing body, you will need to account for GST on any monetary payments that you receive for your supplies.
Racing bodies set the amount of prize money for each race. If a GST-registered participant wins prize money, the racing body will generally, though not always, increase the amount paid by 10% for that participant's share of the prize.
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Racing bodies are not required to increase prize money by 10% for GST-registered participants. Any decision to do so is made by the racing body. If a racing body does not increase prize money, you are still required to account for GST of one-eleventh of the money received. Payments received without a 10% increase are not GST-free and you should not include these as GST-free supplies on your activity statement.
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Non-monetary prizes
A trophy or any other non-monetary prize that is paid by a racing body to you as an owner, lessee, trainer, driver or jockey may be subject to GST.
Non-monetary prize as payment for your supplies
If you are a GST-registered owner, lessee, trainer, driver or jockey making racing related supplies to a racing body, you may need to account for GST on any non-monetary payments that you receive for your supplies. (See Non-monetary prizes not included as payment for your services for information on when you are not required to account for GST when you receive non-monetary prizes.)
If you receive non-monetary payments, you need to work out the GST-inclusive market value of the non-monetary payments you receive. As the supplier, you are responsible for determining this value using a reasonable method.
Examples of reasonable methods include:
- the market value of an identical good, service or thing
- the market value of a similar good, service or thing
- the market value of the supply
- a professional appraisal.
Example
Determining the GST-inclusive market value of a non-monetary prize
Jenna is a GST-registered jockey who recently participated in a racing event in the course of her racing enterprise. Jenna received a non-monetary payment in the form of a new saddle for participating in a racing event. To work out the GST-inclusive market value of the saddle, Jenna visits a local equestrian supplies store. Jenna does not find an identical saddle, however she finds a saddle that is very similar. Jenna determines that her saddle has the same GST-inclusive market value as the saddle she found in the store.
Because the equestrian supplier conducts an enterprise that ordinarily sells saddles, and the saddle Jenna found is similar in every way to her own, Jenna can feel confident that she has used a reasonable method for determining the GST-inclusive market value of her saddle.
Generally, the racing body will list the value of the non-monetary prize on the recipient RCTI they issue to you.
It is important to understand that if you are registered or required to be registered for GST and you receive a prize intended as a non-monetary payment from a racing body in return for your supplies, there have been two separate transactions:
- You have made a taxable supply to the racing body - in this instance, you must account for GST on the GST-inclusive market value of the non-monetary prize the racing body provides to you.
- The racing body has supplied you with goods or services - the supply of goods or services to you are taxable supplies by the racing body in addition to being a payment to you for your supplies. You will be entitled to claim a GST credit equal to the amount of GST you pay on the prize.
As the payment takes the form of goods or services, the racing body must also account for the GST on the value of the prize.
Non-monetary prizes not included as payment for your services
You do not have to account for GST on non-monetary payments where the prize is purely a symbolic recognition of your achievement (such as a medal, ribbon, trophy or similar prize). We consider that such prizes have no market value and as such are not considered payment for your services. Therefore you are not entitled to claim a GST credit as the prize has no value.
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If your medal, ribbon, trophy or similar prize is unique, contains valuable metal or gems, or exhibits quality artistic design or craftsmanship, it will be subject to GST.
Non-monetary prizes that are designed for a practical use are not purely a symbol of recognition. For example, a prize of a crystal decanter, a computer or an item of sporting equipment has a market value that is included as payment for your services, even though a racing body may describe it as a 'trophy'.
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For more information refer to:
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Example
Supply of a prize that is only a symbolic recognition of achievement and has no market value
At a race meeting, the AAA Race Club provides a silk rug (GST-inclusive market value $330), along with the prize money as first prize in a race. The silk rug is embroidered with the race name and the year of the race.
Mary owns the horse that wins the race and she is presented with the silk rug. Mary is registered for GST and is participating in the race in the course of her horse racing enterprise.
Whilst Mary must account for GST on any prize money she receives, she is not required to account for GST on the value of the silk rug. This is because the prize is not received as payment for the participation of Mary's horse. The prize is purely symbolic - it recognises the winner's achievement and has no value other than its personal or sentimental value to Mary.
The AAA club is not required to account for GST when they provide the silk rug to Mary as they have not made a taxable supply. This is because the silk rug is merely provided as a symbolic recognition of the winner's achievement and has no market value.
Example
Supply of a prize that is more than a symbolic recognition of achievement and has a market value
The AAA Race Club also presents a trophy (GST-inclusive market value $22,000) to Mary as the winner of the AAA Race Club Cup. The cup is partly made from gold and has been elaborately designed and engraved requiring a high quality of craftsmanship.
The trophy is more than symbolic recognition of Mary's achievement and its GST-inclusive market value is included in the price of the racing supply Mary made.
The requirements for accounting for GST and any entitlement to GST credits are the same as in example 'Determining the GST-inclusive market value of a non-monetary prize'.
Example
Supply of a prize to a participant that is registered for GST
A GST-registered racing club conducts a race meeting. Bob's horse wins the Country Mile as part of the race meeting. Bob is registered for GST and is participating in the race in the course of his horse racing enterprise.
The racing club supplies prize money to Bob for winning the Country Mile. In addition to the money, the racing club also provides a non-monetary prize of a horse rug. The rug is designed to protect a horse from the elements and has a GST-inclusive market value of $440.
Bob must account for GST on the prize money and on the value of the horse rug as both are payments received for the supply he has made to the race club. The horse rug is included as a payment as it is designed for a practical use and is more than a symbolic recognition of Bob's achievement.
As Bob is registered for GST, he can claim a GST credit of one-eleventh of the GST-inclusive market value of the horse rug.
Imports
When is GST payable on imports?
GST is payable on all taxable imports. You make a taxable import if you import goods for use in Australia. GST may also be payable on some intangible supplies made to you such as a service.
Generally, GST will not be payable on imports if:
- they are non-taxable imports
- the value of a taxable import of a live animal that was exported has not changed, or
- the Australian Customs Service ('Customs') temporary import provisions apply.
Non-taxable imports
An import of goods can be a non-taxable import if:
- the goods were exported from Australia and are returned to Australia without being altered, treated, renovated or processed, and
- the importer was not entitled to, and did not claim, a tourist refund on the goods, and
- the importer:
A. is the manufacturer of the goods, or
B. has previously purchased the goods by a taxable sale or taxable import.
The import of goods is also non-taxable if the importer purchased or imported the goods before 1 July 2000 and:
- the goods were subsequently exported and returned to Australia on or after 1 July 2000 in an unaltered condition since their export, and
- the ownership of the goods when they are returned to Australia is the same as their ownership on 1 July 2000.
In the racing industry, any treatment to (or training of) an animal whilst overseas means that it is unlikely that the animal will be returned in an unaltered condition. This includes a mare returning to Australia in foal. Therefore, it is unlikely that the re-importation of race animals or animals used for breeding would be a non-taxable import.
When is the value of a taxable import nil?
You must pay GST on the value of a taxable import. If the value of the import is nil, you do not have to pay GST on the import.
If a live animal is exported from Australia and then re-imported to Australia, GST will be payable on the import if the value of the animal is greater than its value prior to being exported from Australia. The amount of GST payable will be calculated on the amount by which the value of the live animal has increased.
Example
GST not payable on re-import of live animal
XYZ Stud Farms wishes to re-import a stallion to Australia from New Zealand. The stallion was purchased in New Zealand several years ago and has been imported and exported between Australia and New Zealand for its services several times.
The stallion was valued at $200,000 immediately before it was last exported to New Zealand. Prior to importing the stallion back to Australia, another valuation is conducted and XYZ Stud Farms finds that the stallion is still valued at $200,000. Because the value of the stallion has not increased whilst in New Zealand, the value of the import is deemed to be nil. Therefore XYZ Stud Farms do not have to pay GST on the import.
Example
GST payable on re-import of breeding livestock
A horse racing syndicate sends its best mare to New Zealand to be serviced by a past Melbourne Cup winning stallion. On export the mare is valued at $250,000. When the syndicate re-imports the mare, her value has increased as she is in foal. Customs now values the mare at $300,000 (this includes the cost of transport and associated insurance and may reflect such things as the stallion service fee paid). The value of the taxable importation is $50,000 ($300,000 less $250,000).
Therefore the racing syndicate must pay $5,000 GST (10% of $50,000).
Customs temporary import provisions
You may wish to import horses into Australia on a temporary basis for purposes such as racing or breeding. As the temporary import provisions are administered by Customs, we recommend you contact Customs direct for more information.
Generally, goods may be brought into Australia on a temporary basis without the payment of Customs duty or GST, providing a security deposit or undertaking is given and certain conditions are met. All temporary imports must be re-exported within the approved period, usually for a period of up to 12 months. The nature of the goods, what they will be used for while they are in Australia and who is importing them will determine whether they are eligible for temporary import.
In the racing industry, animals imported for racing may qualify under the temporary import provisions, however animals imported for breeding purposes will generally not qualify.
Example
GST not payable on imports under the Customs temporary import provisions
Freddy is a non-resident of Australia and wishes to import his horse from New Zealand to compete in several Australian races. Harness Racing Promotions have applied for and received a Customs' special events exemption on these races.
Freddy applies to import his horse under the Customs temporary import provisions. If Freddy's application is approved, he will not have to pay GST on import, however he will need to provide a security deposit or bank guarantee and ensure that the horse is exported within an approved period of time.
Example
GST not payable on imports under the Customs temporary import provisions
Sam is a jockey and is not a resident of Australia. Sam wishes to import his customised riding equipment for use during his rides in Australia. Sam applies to Customs to import his equipment as 'professional equipment' under the Customs temporary import provisions. Sam's application is approved with some conditions. He must also provide Customs with a security deposit that will cover duties and taxes payable.
If you have an issue relating to the import of goods (including animals), you should contact Customs. Other issues relating to import may include:
- the death of an animal imported under the Customs temporary import provisions
- the import of frozen or fresh animal semen.
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You can contact Customs by:
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Who pays GST on imports?
Generally, you have to pay GST on goods you import into Australia if you are the beneficial owner of the imported goods. Transporters and other facilitators who arrange the import of goods are not regarded as importers for GST purposes.
You must pay GST on taxable imports regardless of whether you are registered for GST or not. This includes individuals, and other entities, who do not carry on an enterprise.
Customs collects GST and customs duty on imported goods when they enter Australia. If you are registered for GST, you are entitled to claim GST credits for GST paid on anything imported for business purposes.
Non-residents with resident agents
A non-resident may be an importer for GST purposes if they import goods into Australia. The same general rules apply and GST is payable on the import by the non-resident.
There are special rules for certain non-residents who appoint resident agents to act on their behalf. If a non-resident is registered or required to be registered for GST and makes a sale or import through the resident agent, special rules apply.
If these special rules apply, the non-resident's GST obligations transfer to the resident agent, that is, GST must be paid by the resident agent and not by the non-resident. Similarly, the resident agent is entitled to claim GST credits on purchases and imports made in carrying on the non-resident's enterprise in Australia.
A resident who is acting as an agent for a non-resident is required to be registered for GST if the non-resident is registered or required to be registered.
Example
GST payable by a resident acting as an agent for a non-resident
ABC Worldwide Racing is a non-resident entity wishing to import several thoroughbred horses for the spring racing carnival. ABC Worldwide Racing conducts its racing activities as an enterprise and registers for GST. They appoint QTX Australian Racing as a resident agent to import on their behalf. QTX Australian Racing is registered for GST.
Because QTX Australian Racing is a resident agent for ABC Worldwide Racing, they must pay the GST on the imports. They are also entitled to claim the GST credits for the GST paid on the imports.
How much GST is payable on imports?
GST is charged at 10% of the value of the taxable import. The value of a taxable import is the Customs value plus the cost of international transport, insurance and customs duty.
What options are there for paying GST?
Generally, GST must be paid by the importer at the same time and in the same way as customs duty. This is collected by Customs at the time the goods are 'entered for home consumption' - that is, when Customs releases them for use in Australia.
Deferred GST scheme
If you are an approved entity under the deferred GST scheme, you may defer payment of GST on imported goods until the first activity statement is submitted after the goods are entered for home consumption.
Example
GST deferred on a taxable import
Mandy is an Australian resident who purchases a horse in America and wishes to import it into Australia. She meets the enterprise test for her racing activities and is registered for GST.
Mandy lodges her activity statement monthly and has received approval to use the deferred GST scheme. Mandy uses the services of an Australian transport company to arrange the import.
Mandy defers the GST on the import when the horse is entered for home consumption. The deferred GST will appear on Mandy's next activity statement and she is entitled to claim a GST credit for the same amount if the horse is to be used in her enterprise.
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For more information about this scheme, phone the deferred GST scheme helpline on 1300 130 915 or refer to:
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Can the GST paid on imports be claimed as a GST credit?
You are not entitled to claim GST credits if the goods you import are intended for private use or for making input taxed supplies. You may be entitled to claim GST credits for the GST you pay on your import if the goods are for use in your enterprise and you are registered for GST. Your entitlement to claim GST credits is not transferable and can't be assigned to another entity.
Example
GST payable on taxable import
Sam is an Australian resident who purchases a horse in New Zealand and wishes to import it to Australia. Sam conducts his racing activities as a hobby so he can't register for GST. Sam uses an Australian transport company to arrange the import.
Sam must pay the GST on the import when the horse is entered for home consumption. Because Sam can't register his racing activities, he can't apply to defer the GST payable. Furthermore, neither Sam nor the transport company is entitled to claim a GST credit for the GST paid on the import.
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For more information refer to GST ruling GSTR 2003/15 - Goods and services tax: importation of goods into Australia.
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Exports
Selling animals to be exported
If you are registered or required to be registered for GST and you sell racing or breeding animals, the sale will be GST-free if you export the animal before or within 60 days of:
- the date any payment is made for the animal, or
- if earlier, the date on which you provide an invoice, or
- if the sale is paid for in instalments
- the date on which the final instalment is paid, or
- if earlier, the date on which you provide an invoice for the final instalment.
If you sell an animal to a purchaser and the purchaser intends to export the animal, the sale must be treated as a taxable sale. However, the sale may be GST-free if the animal is exported under the following conditions:
- the purchaser is not registered or required to be registered for GST
- the purchaser exports the animal
- the animal is entered for export within the meaning of the Customs Act 1901
- from the time the animal is sold to the purchaser, the animal is not altered or used in any way before export, except to prepare it for export
- the animal is exported within the 60 day time limit (or such further time period as the Commissioner allows), and
- you have sufficient documentary evidence to show that the animal has been exported. Examples include a cleared Export Declaration Number (EDN), bill of lading or an extract from the Australian Stud Book evidencing the animal's departure.
If any of the above conditions are not met, the sale will remain a taxable sale.
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Any use of the animal prior to export, which is essentially the same as the ultimate intended use of the animal, is not considered to be usage necessary to prepare the animal for export.
For example, where a horse is sold to a non-resident, it will remain a taxable sale if the horse is used for breeding or raced in Australia before it is exported.
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Extension of 60-day export period and sales to non-residents
The law provides a discretionary power to the Commissioner to extend the 60-day export period. The Commissioner will consider a number of factors in determining whether such an extension is warranted. These include, but are not limited to, any practical circumstances beyond the control of the exporter.
If you are an owner, bloodstock agent, vendor, breeder or trainer who sells animals to non-residents requiring longer than 60 days to export the animal, you should apply in writing for an extension.
As each request for extension is considered on its merits, it is important that your request outlines the specific circumstances of your case, including the period of extension required and full reasons for requesting the extension. You should submit your request as soon as you (or the non-resident purchaser) become aware that the animal will not be exported within 60 days. We recommend you submit your request before the 60-day period has elapsed.
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Written requests should be sent to us:
- at
Australian Taxation Office
PO Box 3524
ALBURY NSW 2640
- via email at GSTmail@ato.gov.au
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Auction sales
Generally, auctioneers provide their services to you when selling animals on your behalf. Prior to the auction, the auctioneer will need to know whether you are registered for GST or not. This is because sales are only subject to GST if the vendor is registered for GST.
Before an auction begins, the auctioneer needs to advise bidders:
- of the registration status of the vendor
- whether the animal being sold is subject to GST, and if so
- how the GST will be calculated.
This information may be communicated via catalogue or a verbal announcement before the auction.
If the vendor is an ownership group, it is possible that part of the group may be registered for GST whilst the remainder of the group may not (see 'Can the same racing animal be supplied by more than one entity?'). In this instance, the auctioneer must be advised of the correct percentage of GST-registered ownership of the animal.
Can animal sales at auction be GST-free?
All animals sold at auction must have GST included in the final sale price where they are sold by an entity that is registered or required to be registered for GST. If an animal is sold to someone who exports the animal within the 60-day time limit, the sale may become a GST-free export if the previously listed requirements are met.
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For more information refer to GST ruling GSTR 2002/6 - Goods and services tax: exports of goods, items 1 to 4 of the table in subsection 38-185(1) of the A New Tax System (Goods and Services Tax) Act 1999.
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Last Modified: Tuesday, 27 March 2012