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Edited version of your private ruling
Authorisation Number: 1012530623304
Ruling
Subject: Are you considered to be carrying on a business of horse racing?
Question
Are the payments for horse race winnings from your racing activity, either in Australia or overseas, to be included in your assessable income in the year ended 30 June 2010?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2010
The scheme commenced on
1 July 2009
Relevant facts
You have owned and raced horses for a long period of time.
You usually have one horse at any one time and are also a member of a syndicate who race shares in other horses.
You have never claimed expenses or included revenue as assessable income.
During this period you have sometimes unsuccessfully bred with one mare per annum, but have not bred recently.
You raced a leased horse overseas and won some prize money.
You currently race one mare and own another horse which you will race when the mare finishes racing. You will not breed from the mare.
You consider your involvement in racing a hobby.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 8-1
Reasons for decision
The assessability of income (section 6-5 of the ITAA 1997) and the deductibility of expenses (section 8-1 of the ITAA 1997) will depend on whether you are considered to be carrying on a business of horse racing.
The Commissioner's view on whether the racing of horses, as a stand alone activity, may amount to the carrying on of a business is set out in Taxation Ruling TR 2008/2, specifically in paragraphs 75 to 85.
Your activities are considered to be the mere pursuit of a hobby. You are relying on chance rather than any system or organisation, to make a profit. For syndicated horses, you are dependant on other persons selecting a horse, making the horse available for syndication, training, managing and selecting races and riders. The number of horses you have racing yourself is very limited and not indicative of a business activity.
You are not considered to be carrying on a business of horse racing. Any payments received from prize money would not form part of your assessable income and all expenses relating to the racing activity are not deductible for income tax purposes.
It does not make any difference if the payments are received from racing a horse overseas, if the activity is a hobby.