Page 10 - March 2007 The Game

10 The Game, March 2007 Canada’s Thoroughbred Racing Newspaper
Horse Racing Alliance Working on Tax Break
By Peter Gross
The Horse Racing Alliance of Canada, formed in 1977, has dedicated itself to having the Government amend subsection 31(1) of the Income Tax Act, which the HRAC believes “is stifling the growth and ability of the Canadian horse racing and breeding industry to be competitive.”
Section 31 of the Income Tax Act restricts the deductibility of business losses incurred by part-time horse owners and breeders to $8750 a year. This is quite
the sore thumb sticking out for people considering investing in the horse game, as all other businesses in Canada can deduct all their losses against other income, regardless of the amount.
The Horse Racing Alliance of Canada represents a broad cross-section of racetracks, trainers, owners, breeders ,and harness racing people. Some of its members include Horse Racing Alberta, Manitoba Jockey Club, Woodbine Entertainment Group, all divisions of the Horsemen's Benevolent and Protective
Association and the Canadian Thoroughbred Horse Society, Standardbred Canada, Racetracks of Canada, The Jockey Club of Canada, Ontario Harness Horse Association, Alberta Standardbred Horse Association and the B.C. Standardbred Association.
“The Horse Racing Alliance of Canada was formed to bring the investment in horse racing in Canada into the 21st century,” says Harvey Nightingale of Hill and Knowlton, consultants to the Alliance.
Supporting the argument for a fairer tax rule, the HRAC has provided the government with several unpleasant statistics that show a considerable drop-off in racing related activity in Canada. For example:
• A 38% decline in the number of races held in Canada.
• A 24% decline in registered thoroughbred foals born in Canada since 1992.
• An increase in the number of American and European horses winning important high stakes races
held in Canada.
The HRAC characterizes
the $8750 deduction cap in section 31 as ‘discriminato- ry’, pointing out that it directly “impacts approximately 40,000 part-time horse owners and breeders and over 100,000 trainers, drivers, jockeys, exercise riders, grooms, hotwalkers, blacksmiths, feed and equipment suppliers and racetrack workers that earn their living from this industry.”
The recommendation of the HRAC is that “The Government of Canada should eliminate ‘breeding and maintaining of horses for racing’ from section 31 of the Income Tax Act. If this were to happen, according to the HRAC, there would be a myriad of positive results:
• It would create up to 15,000 jobs across Canada
• It would add $260 million in wages and salaries to the economy
• It would benefit for all levels of government to the tune of $135million in taxes
• It would generate capital investments of more than $200 million.
Nightingale points out that in 1952, the amount a part-time owner could deduct against other income was $5000 and that was increased in the 1980s to $8750, the same amount it is today decades later. The HRAC believes the amount should be closer to $50,000.
“With the growing competition for the betting dollar, if the horse racing sector is going to be allowed to grow and survive, then section 31 of the act has to be amended,” argues Nightingale. “Or alternative- ly, the amount of deductibility has to reflect today’s cost of operations.”
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