There’s more cash up for grabs than the prize
This afternoon, like everyone else in Australia, BMT will be holding its breath when the winner of the 2014 Melbourne Cup is announced. With $6.2 million up for grabs as prize money and many millions more being thrown down at the betting stations, discussion of the race always comes back to money. Working in an office of tax depreciation specialists, any such talk of money will eventually turn into a discussion of tax deductions. With all the ritz and glamour surrounding the race, the question always raised is what sort of deductions would be available for all that excess? This year we’ve decided to share our answer.
Going to the races
Flemington Racecourse is one of the largest sport complexes in Australia and certainly sees more money passing through on just this one day than most people will ever see in their lifetimes. It has state of the art facilities that attract racers and spectators alike from all across the world to put their money on the line.
However, what if you decided that you wanted a piece of the action and set up your own event to rival the Melbourne Cup?
If BMT decided to set up a competing event, with a facility equally as lavish as Flemington Racecourse, it would need a track, stables, member’s area and three massive grandstands. Not including the costs of acquiring enough land to accommodate such a large racecourse, a conservative construction cost estimate of the new buildings would be $100 million.
With all that outlay, the tax deductions for the depreciation of BMT’s racecourse would be huge. The below table shows a rough estimate of what could be claimed, provided that we used BMT for the tax depreciation schedule.
Punting, BMT style
Clearly, if we were ever to create an event rivalling the Melbourne Cup, significant capital raising would be needed. Fortunately we have devised a method to use our depreciation expertise to pick the winner of this year’s Melbourne Cup.
Many punters are unaware that racehorses are actually listed as depreciable assets by the Australian Taxation Office. With a little research it is possible to find the purchase price of a number of the horses competing in this year’s race and estimate the deductions available to their owners. What’s more, by looking at the year of purchase it is possible to estimate the remaining depreciable value of each competitor. Our hypothesis is that the horse with the greatest remaining depreciable value will have the winning edge in today’s race.
The below table shows our race analysis for 2014.
While our predictions seem at odds with conventional bookmaker wisdom, our analysis indicates that Brambles should be the winner by a hair this afternoon. If our depreciation estimates prove to be an accurate way of predicting the winner we could be well on our way to starting our own race event, which we are pleased to announce would be called the BMT Cup.
All recommendations given are made solely for entertainment purposes. BMT Tax Depreciation is not responsible for any loss or damages resulting from the above advice.