HomeHome SearchSearch MenuMenu Our productsOur products

Want to try your hand at next year's Durban July? First, find out how Vat affects racehorse owners

by , 09 July 2013
Dubbed Africa's greatest horseracing event, the glitzy Vodacom Durban July took place this weekend. According to reports, the owner of the winning horse, Chris van Niekerk pocketed a cool R3.5million at Greyville for the second year running when jockey S'Manga Khumalo drove four-year-old horse Heavy Metal across the finish line. If you're looking at the large prize money and fancy entering your horse at next year's race, here's what you need to know about the Vat implications of being a race horse owner.

When the owner of the horse that won this year's Durban July is done popping the champagne, he'll have to attend to paying Vat on his winnings.

 After all there are specific Vat implications that pertain to race horse owners.

Here's how Vat affects race horse owners

Vat affects racehorse owners in that they make the services of their race horses available to the racing operators, the Practical Vat Loose Leaf Service explains.

If the total income from these services exceeds the R1 million Vat threshold in any 12-month period, the owner must register as a Vat vendor. But if the total income is more than R50 000 in any 12-month period, the race horse owner isn't required to register, but can do so voluntarily if he so desires.

In 2008 a provision that allows for payments received by a race horse owner from the racing operators to be zero-rated for Vat purposes was introduced. In this case, the owner must show such zero-rated supplies in the applicable Block 2 of the Vat return.

Here's an example of how this vat implication works

Mr Smith owns a horse, Smoking Guns, which he races. He receives R12 000 from the racing operator for Smoking Guns' victory in a race in May. If Mr Smith is a Vat vendor, he must account for the Vat on this consideration. This works out to be R1 473.68, but due to the 2008 provision, vat on this consideration is nil.

Remember, as a Vat vendor, the race horse owner will receive consideration (an amount including Vat) from the racing operator. However, this consideration is dependent on the success of the horse that is racing (whether the horse wins or not). If the owner is a Vat vendor, he'll have to account for Vat on the consideration received.

Well there you have it. The Vat implications of being a race horse owner. Keep this in mind if you fancy getting into the horseracing industry.



Related articles




Related articles



Related Products



Comments
0 comments


Recommended for You 

  Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance



Here are all the most interesting, thought-provoking and common tax questions
asked by our subscribers over the last tax year – everything from A to Z!

To download Quick Tax Solutions for Busy Taxpayers – 35 tax answers at a glance click here now >>>
  Employees always sick? How to stop it today



Make sure you develop a leave policy to regulate sick leave in your company.

BONUS! You'll find an example of the leave policy and procedure in this report.

To download Employees always sick? How to stop it today click here now >>>
  Absenteeism: Little known ways to reduce absenteeism



This FREE e-report will tell you how you can reduce absenteeism in your workplace while avoiding the CCMA and without infringing your employees' labour rights.

To download Absenteeism: Little known ways to reduce absenteeism click here now >>>
  7 Health & safety strategies to save you thousands



Don't let a health and safety incident cost you one more cent. Implement these seven
strategies in your company today.

To download 7 Health & safety strategies to save you thousands click here now >>>