GST win for racing clubs
the stakes payments were consideration for the services.
The lawyer for the Commissioner of Inland Revenue said trainers and riders supplied services to horse owners, but clubs were receiving a ‘‘benefit’’, rather than a service.
Under the current system the clubs pay the owner stakes or prize money minus any GST.
Owners, many of them hobbyists, might be GST-registered, while trainers were generally GST-registered, and most riders were. Under the current system, if the club paid the owner stakes money of $1000, the owner would pay the trainer $115 (10 per cent plus GST), and the rider $57 (5 per cent plus GST).
The owner cannot claim back any GST and ended up with $827.
Under the new system proposed by the clubs to the High Court, the club would pay the trainers and rider the same amounts plus GST, but would also be able to claim GST of $22 and pay the owner $850.
Justice Cull concluded that stakes payments were an inducement to trainers and riders, bound by industry rules, to supply services to a club.
‘‘Participation by the trainers and riders in club races is a supply of services, for which the club pays stakes money to the successful trainers and riders and from which the club derives a benefit. This benefit does not affect the fact that there is a supply of services,’’ the ruling said.
The New Zealand Racing Board oversees the industry and conducts betting for all three racing codes – thoroughbred, harness and greyhound racing.
New Zealand Thoroughbred Racing oversees the thoroughbred code including clubs, owners, trainers and riders. It has authority to make rules and provide for prize money – 80 per cent to 85 per cent to owners, 10 per cent to trainers, and 5 per cent to 10 per cent to riders.
Clubs make money from nomination and acceptance fees, gate entry fees, hospitality, commission on bets, sponsorship and memberships. Stakes payments were paid to attract owners to enter the horses and higher stakes generally attracted higherquality horses, the court heard.