“You have this big elephant down there, with its big magnet down there, pulling capital out of our country,” Mark Halloran, managing director of the Canuck Racing Club, told CTV News regarding the shifting thoroughbred industry.
Canadian horse breeders, thoroughbreds, and buyers are moving south of the border, driven by U.S. tax breaks that are beginning to decimate Canada’s industry, CTV News reported. Woodbine Racetrack in Toronto housed roughly 1,900 horses three years ago, but that population has dropped to 1,600 and continues to fall. Industry leaders warn that the trend is reducing the number of horses, races, and jobs, which ultimately diminishes investment within Canada.
U.S. Tax Policy Draws Canadian Breeders South
The primary driver behind the migration is a tax provision included in U.S. legislation often referred to as “One Big Beautiful Bill.” Under current U.S. rules, buyers can deduct the full purchase price of a racehorse. In contrast, section 31 of the Income Tax Act restricts the amount of losses a Canadian racehorse owner can write off to a maximum of C$17,500.
Canadian thoroughbred breeder Glenn Sikura noted the disparity, explaining that purchasing a broodmare for US$300,000 in the United States allows for a write off of 100 per cent, whereas a Canadian buyer remains capped at C$17,500. Sikura stated that Canadian-bred horses now sell for thousands of dollars more in the U.S. than they do domestically. Facing significant financial losses at home, Sikura travels to Kentucky to sell Canadian thoroughbreds because he cannot afford to sell them in Canada.
Employment Impacts Across Canadian Agriculture
The contraction of the horseracing sector supports tens of thousands of jobs across multiple industries. Canadian trainer Josie Carroll employs 41 workers to care for 65 horses currently in training. Carroll explained that her operation supports exercise riders, grooms, veterinarians, and feed companies providing hay and oats. She noted that nearly every horse leaving Canada for the U.S. means another worker has to be let go, expressing doubt that racing can survive at its current level in Canada.
Canuck Racing Club operates as a proudly Canadian ownership group with no plans to leave the country entirely, but Halloran admitted the company is weeks away from opening a leg of its business in the U.S. to take advantage of American tax incentives. Halloran criticized Canada’s tax code for treating most horse owners as part-time hobby farmers rather than commercial enterprises, pointing out that legislation dating back to 1949 no longer reflects modern business realities.
Federal Response and Future Outlook
Bill Ford, executive vice-president of racing at Woodbine Racetrack, called for immediate legislative action to address section 31 and stop the flow of horses to the United States. When CTV News asked the federal finance minister’s office about reviewing the tax code, the ministry acknowledged the horseracing industry’s economic contributions in an email but stated that it would be inappropriate to speculate on prospective changes.
Frequently Asked Questions
When was section 31 of the Canadian tax code enacted?
Section 31 originates from a piece of legislation written back in 1949, which industry leaders argue fails to reflect modern business operations.
How many horses currently reside at Woodbine Racetrack?
Woodbine Racetrack is home to roughly 1,600 horses, down from approximately 1,900 horses three years ago.
What is the maximum write-off limit for Canadian racehorse owners?
Section 31 of the Income Tax Act restricts the amount of losses a racehorse owner can write off to a maximum of C$17,500.
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