Syndicate Annual General Meetings

View previous topic View next topic Go down

Re: Syndicate Annual General Meetings

Post by ray the beancounter on Mon Jul 31, 2017 6:05 pm

Barry, I do believe that the tax department have taken the correct approach in this instance.

I have never been able to understand how the syndicate was able to be registered for GST in the first place – yes I know that other similar syndicates were also similarly registered for Goods & Services Tax but it seemed rather an opportunistic position to be taking.

Under the income tax legislation stakes earnings from races are exempt from income tax and expenses incurred in racing horses are consequently non-deductible for income tax purposes.
What therefore is the syndicates “taxable activity”??? and it is the carrying on of a taxable activity that must exist before any entity can be registered for Goods and Services Tax.

The tax department has now ruled that a “taxable activity” does not exist for syndicates such as ours and that the GST registration of any such syndicates must cease as at 30th June 2017 with an adjustment being made to pay back GST claimed on horses that you still own on that date, subject to various valuation methods offered in the legislation.
It is only the 2017 syndicate that will have any real material amount to repay to the tax department, with the 2016 syndicate having only a very minor liability and the 2014 syndicate having nothing to repay.
avatar
ray the beancounter

Posts : 321
Join date : 2015-03-29
Age : 51
Location : Auckland

Back to top Go down

Re: Syndicate Annual General Meetings

Post by barryf on Mon Jul 31, 2017 3:05 pm

Thanks Ray for that report.  The IRD's stated position on racing syndicates is quite clear and they do not lose too many cases in court.Just got to accept the status I guess.  

The 2 horse syndicate scenario has some appeal- it has been used in past I recall (Helena Kilena?) while another year it was 4 ( cheapies I suggest!).

While I am a bit disappointed at seeing the 2016 fold   many members will have their own agenda, depending on their particular outlay and circumstances at the time. The voting does call into question the voting system as absentee voters who vote by proxy are not subject to any discussion which may take place at the meeting which, in itself, could lead to a change of views if they were present.
The early syndicates did require that voters had to be in attendance to record a valid vote but this was subsequently changed- not satisfied it was for the better.

barryf

Posts : 255
Join date : 2015-03-30

Back to top Go down

Syndicate Annual General Meetings

Post by ray the beancounter on Sun Jul 30, 2017 8:22 pm

I attended the three syndicate Annual General Meetings this afternoon and report as follows:

4.00pm 2014 Syndicate:
A brief report was provided by Andrew as to the current balance of the syndicate bank account and in regard to the fact that Goods & Services Tax would no longer be claimable by the syndicate and accordingly the syndicate members would have to fund the GST inclusive monthly operating costs and not the GST exclusive amounts as was previously the case. The monthly members contributions will need to be monitored in light of this GST change and may need to be altered for all syndicates.

All was going smoothly with the meeting until we got to the “General Business” section of the agenda when an email was read from an attending syndicate member suggesting that Bettors Pocket be sold. A slightly heated discussion was had with some members suggesting that his form was only moderate and that he was unlikely to win another race. I strongly disagree with this statement and believe that he is probably in the form of his racing career. Rob Carr was in attendance and suggested that a discussion be held between our manager Andrew and Tony Herlihy (who is currently overseas) seeking his indication of his opinion of the medium to long term future of the horse.
Having personally had two horses previously trained by Tony Herlihy I can confidently state that Tony is not a trainer to hold on to a horse purely to keep an income stream of training fees and Tony will always tell you when a horse is in need of being moved on. The fact that Tony H has not made mention of selling Bettors Pocket as yet is a strong indicator that he believes that he is comfortable in continuing to retain and to race the horse and that the horse is up to it.

A discussion was held in regard to future syndicates and the possibility of having a two horse syndicate with a slightly higher purchase cost for each horse to enable a better quality of horse to be purchased (spending no more than is being currently paid for the three horse syndicates now) but providing some savings on the monthly contributions as you will only have two trainers costs to cover. A costing of the options available is to be compiled by our manager.

A discussion was held in regard to the recent tax law change which has forced the syndicate to cease being registered for Goods & Services Tax and to make an adjustment (GST payment) in regard to horses still retained by the syndicate as at 30th June 2017. Based upon the formula provided by the tax department horses that have been owned for greater than 3 years are valued at 0% of their original cost so no GST adjustment is required to be made on Bettors Pocket.

4.35pm 2016 Syndicate:
A brief report was provided by Andrew as to the current balance of the syndicate bank account and in regard to the fact that Goods & Services Tax would no longer be claimable by the syndicate on expenses paid, as detailed above.

This meeting went through until 5.10pm and did get rather nasty at times. Some syndicate members need to understand that the syndicates make decisions based upon a democratic majority of the members and that just because a majority decision does not go your way does not entitle you to make nasty comments in public. The meeting became quite divided.
The remit number 1 was voted on (to sell or dispose of both remaining one and a half horses in the syndicate) and this resolution was passed by a vote count of 25 in favour (9 present plus 16 proxies) versus 16 against (10 present plus 6 proxies). The horses will thus be disposed of and the syndicate will be closed down.

A discussion was held as to the values of the horses and Andrew had already obtained valuations on the two horses as these were required in regard to Goods and Services Tax adjustments and also in readiness for this meeting. The trotter was valued at $500 and I think that this is rather generous as he is just a give-away hack, and a value of $6,000 placed on the pacer (ie. half share $3,000). A discussion is to take place outside of the meeting between our manager and the other 50% owners of the horse to see if they are interested in buying back the syndicates half share and then negotiating a value.
One disgruntled syndicate member openly suggested that Rob should offer $10 to the syndicate as a protest – that gives you an example of the divisive comments being bandied about and the disappointing immature tone of the meeting.

As regards the Goods & Services Tax adjustments to be made on the one and a half horses held by the syndicate as at 30th June it will be made on the $500 and $3,000 values mentioned above so the GST component on these amounts is relatively immaterial.

5.15pm 2017 Syndicate:
The new syndicate members that are only part of the 2017 syndicate joined the meeting and this AGM was a much calmer, sensible and shorter meeting.

A brief report was provided by Andrew as to the current balance of the syndicate bank account and in regard to the fact that Goods & Services Tax would no longer be claimable by the syndicate on expenses paid, as detailed above.

As regards the Goods & Services Tax adjustments to be made on the three horses held by the syndicate as at 30th June it will be based upon the tax departments formula which values the horses at two-thirds of the cost price. A GST adjustment of about $9,000 to be paid.

A brief report was provided on each horse and the fact that the race series fees have been paid up for Park Avenue and Bet I Can but not for Cha Cha B as Bunty Hughes thinks that he may take a bit longer to mature.
avatar
ray the beancounter

Posts : 321
Join date : 2015-03-29
Age : 51
Location : Auckland

Back to top Go down

Re: Syndicate Annual General Meetings

Post by Sponsored content


Sponsored content


Back to top Go down

View previous topic View next topic Back to top

- Similar topics

 
Permissions in this forum:
You cannot reply to topics in this forum