GST refund payout to be made today

Over 6,000 harness racing owners will be paid $1.8m in additional stakes following historical GST adjustments and subsequent GST refunds obtained recently from Inland Revenue.

The payout will occur on July 25, 2024 and while it is estimated that 60% of the refunds will be less than $10, cumulatively these refunds amount to a significant return for owners.

The GST adjustment relates to stakes payments for the period June 1, 2013 to October 31, 2018. It applies to owners who were not registered for GST but had GST deductions made from the trainers and/or drivers portions of their stakes payments during this period.

The payout follows a court case when, in 2018, the Canterbury Jockey Club (CJC), with the help of New Zealand Thoroughbred Racing (NZTR), went to the High Court and the court ruled that clubs were entitled to claim a similar GST input tax deduction. As the rules for the racing codes were different, HRNZ was unable to rely on the decision in the CJC case to obtain a refund at the same time as our galloping counter-parts, however, following significant consultation with Inland Revenue, the judge’s findings in the CJC case have enabled harness racing clubs to claim the GST adjustment, albeit for different reasons.

Under the previous position, Clubs would pay 100% of stakes to owners (through HRNZs centralised stake system), but deduct 10% for trainers, and 5% for drivers. If the trainers and drivers were GST-registered a GST component was added to the trainers’/drivers’ portion and it is this GST component which forms the refund we now have available for distribution to some owners.

Example:

Assuming the winning stakes for a race were $2,000 and 10% was paid to the trainers and 5% to the drivers, the following is the calculation of the stakes payment prior to 31 October 2018:

From the above, you can see that the net stakes payment is the same irrespective of whether an owner is GST registered or not. However, the GST-registered owner was able to claim the $45 input GST deduction from IRD in their next GST return. This means that the non-GST registered owner is disadvantaged and would have received less.

Following the Court's ruling in 2018, HRNZ made changes to the centralised stakes payments system and since November 2018 all stakes have been paid out under the new rules.

The Northland Harness Racing Club and the Taranaki Racing Inc/Taranaki Trotting Club Inc are no longer registered for GST and/or removed from the Incorporated Societies register. As a result, these clubs could not claim the GST from IRD to pass on to affected owners.

Over the past few months, clubs have received these refunds from Inland Revenue and transferred the funds to HRNZ who are now making the funds available to the owners who are entitled to “top-up” their original stakes.

HRNZ will send an email to affected owners outlining their individual refund amounts. The email and attachment will provide details of the race meeting(s), horse(s) involved and their share of the total GST refund (for shared ownerships and syndicates).

If any owners who don't receive a refund, but believe they should have, it may be because HRNZ doesn't have up-to-date bank account details. They are advised to log in to their myHRNZ account and update details, or send their bank details to accountsdept@hrnz.co.nz.

If you have any questions about how your refund was calculated, or any queries, please contact our office or lydia@hrnz.co.nz.

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