‘It will be difficult now to buy a stallion’

SCRAPPING the stallion tax exemption from July 31, 2008, will make buying stallions a lot more financially risky.

According to the financial advisor to one of the country’s finest studs, it will have catastrophic consequences for the industry with many of the smaller stud farms being unable to purchase the required standard of stallion to compete.

It could also push some of the larger breeders abroad. Most stallions are bought by syndicates made up of ordinary, everyday tax payers with a love for horses, according to Micheal Fahy, financial adviser to the Rathbarry Stud in Fermoy, Co Cork. The stud employs 30 to 40 staff who look after more than 150 mares on a permanent basis between their own mares and long-term, boarding mares from overseas on the 900-acre farm.

Seventy years ago, Paul Cashman, father of the present owner/manager Liam Cashman, stood his first stallion Royal Pom, there in the 1930s. “It will be very difficult now to buy a stallion,” Micheal Fahy said.

“It’s a high risk industry. Buying stallions that are proven racehorses is fine. But buying one that will prove successful as a stallion is far riskier. The tax exemption was a cushion for investors - it reduced the risk. The tax exemption scheme enabled stallions to be bought by ordinary taxpayers.

“Its abolition will have serious implications. All of the stallions here are syndicated - all of the investors in them are all tax payers. Their only tax exemption would be the stallion tax. It typically takes up to five years to break even with a stallion. Scrapping this incentive will make it a lot riskier for people to invest in a stallion.”

The scrapping of the tax could push some breeders abroad, he suggested.

“Other studs who have land abroad might be able to move overseas. We don’t have land abroad so it’s not an option for us. But if the exemption is scrapped, I could see us scaling down. That is a definite reality,” he said.