Stallions - “In the State”

Dual hemisphere or shuttle stallions

Section 231(a) Taxes Consolidation Act 1997 provides that the profits from the sale of services of mares within the State, arising to the owner or part owner of a stallion which is ordinarily kept on land in the State, are not to be taken into account for the purposes of the Tax Acts.

Ordinarily kept

Many thoroughbred stallions are sent to Australia or New Zealand to increase their earnings by availing of the breeding season in the southern hemisphere.

Typically, these stallions are flown out early August and are brought back at the end of December.

The question that arises is whether these stallions would be regarded as ordinarily kept on land in the State.

Decision

It is accepted that, on the facts as outlined above such stallions are ordinarily kept on land in the State and consequently the profits arising from the sale of services of mares within the State by those stallions are not to be taken into account for the purposes of the Tax Acts.

Service of mares within the State

It should be noted that only the profits arising from the servicing of mares within the State are exempt.

Service of mares outside the State

Profits arising from the servicing of mares outside the State are exempt only if the following conditions apply:

• The stallion is ordinarily kept on land outside the State
• The profits arise to the part owner of a stallion
• The part owner of the stallion carries on in the State a trade which includes bloodstock breeding
• The share in the stallion was acquired and is held primarily for the purposes of the servicing mares owned or partly owned by the shareholder.