In addition to having a whole lot of fun as an owner, Australian prizemoney is at a record-high and is some of the best the world has to offer. Over the last decade, prizemoney has increased by 82% with over $819 million dollars paid out to the connections of runners in the 2020/2021 racing season.

That works out at an average of just over $43,000 per race. Although we don’t advise getting involved in ownership purely for financial gain, if you find yourself in a horse with some ability and it stays physically sound and healthy, you have a good chance of recouping your costs.

A Saturday metropolitan (city) race in Sydney or Melbourne is now worth a minimum of $130,000 in total prizemoney, while in Brisbane there is at least $55,000 up for grabs. Working off that, one Saturday city win will usually cover your annual training expenses. Provincial and country racing generally offer smaller purses, but bear in mind, the ongoing costs of keeping a horse in training in these areas are also less.

Minimum Weekend Metropolitan Prizemoney

Rollover or tap map for regional prizemoney breakdown.

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Owner Schemes

Along with the great prizemoney on offer, there are several generous bonus schemes for owners. These include the state-based breeding incentives BOBS (NSW), TasBred (TAS), SABOIS (SA), WestSpeed (WA), QTIS (QLD) and VOBIS (VIC), as well as the lucrative race series’ run by the auction houses.

All up, there is an additional $66 million dollars up for grabs, on top of general prizemoney.

To learn more about how these initiatives work and what’s on offer, head to your relevant Principal Racing Authority (PRA) website, such as Racing NSW or Racing Victoria or visit the auction house websites.

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Residual Value

Prizemoney isn’t the only source of rewards for owners.

If you are lucky enough to own a horse with real ability, then it is likely to be worth more than you paid for it.

Owning a top Group One winning colt can be like holding a winning lottery ticket: in recent years a number of such colts have been bought by stud farms for tens of millions of dollars for their breeding career.

While not in the same league as top colts, well-performed fillies and mares also have a strong residual value with the average price of a stakes-winning filly or mare sold off the track this year some $870,000.

There is also strong demand from Asia for horses that have shown they have the ability to be competitive in metropolitan racing. While not comparing to the value of top colts, there are many horses sold to Hong Kong each year for seven-figure sums.

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Racehorse Ownership and the Tax System

If you become a racehorse owner, it’s almost certain your horse interests will be classed as a hobby by the Australian Tax Office (ATO). This means that receipts or expenses relating to your racing activities will not be assessable or deductible for tax purposes.

If you’re lucky enough to own a horse that is sold for more than you paid for it, you may have to pay Capital Gains Tax (CGT). This is calculated on the difference between purchase and sale price and does not factor in your costs along the way. However, if your share cost less than $10,000 then you’ll be exempt from any tax imposition.

The main circumstances where your horse interests may be considered a business is if you engage in breeding, training and/or trading. In these circumstances it is worth getting advice from an advisor with experience in this area.

Case Study

Imagine you buy a 10% share in a horse for $18,000 which goes on to win the Golden Slipper. Your share in the prizemoney from that race would be worth almost $200,000, all of which is not taxable.

Then you receive an offer from a stud farm wanting to buy your colt for $20 million. If you decide to sell, your $2 million share is liable for CGT (estimated to be $450,000). With careful planning, this tax situation may have been avoided. For example, a couple could have split the share, taking 5% each ($9,000 per person), bringing them under the $10,000 threshold.

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