Here we are in the middle of the thoroughbred yearling sale season and you, a breeder, have come out of it very well. You expected to sell your yearling for about $35,000 and instead you got $55,000.

Hold the champagne for a tick and consider: did you just register for an ABN, and thus formally notify the Australian Taxation Office that you are conducting an enterprise, and not register for GST because you thought it wouldn't make $50,000?

"A breeding activity may have commenced around the time of the ABN registration and the stock at the time was considered not commercial enough to generate revenue of $50,000 or greater on the 2001 yearling sale circuit," he said.

"In an industry where commercial appeal of stock can change so quickly, sale time may see such stock now eagerly sought and bringing prices not envisaged at the time of the original ABN registration.

"Breeders may also be caught where there is a change of intention and decide to sell a yearling that was originally intended to be retained for either future breeding or racing purposes when the ABN registration was arranged."

Mr. Carrazzo said if breeders were not registered for GST, the ATO required them to remit one eleventh of their $50,000-plus sale proceeds to them.

"In essence, the breeder is out of pocket as they did not have the opportunity to charge the 10 per cent GST at the time of sale since they were not registered to do so."

For those breeders who sold at the Gold Coast's Magic Millions, it would be too late, but Mr Carrazzo recommended anyone selling later should register for GST.

"This proactive approach provides the breeder with a safe harbour as the sale would then be considered a taxable supply, thus giving the breeder the right to charge the 10 per cent GST at the time of sale," he said.

"If no reference is made in the catalogue that the vendor is now registered, the vendor should advise the selling agent, who is then obliged to make the disclosure at the time the horse is being sold."

An obvious question arises out of an unplanned GST registration, said Mr Carrazzo: "When can the breeder begin to claim back the GST paid on breeding expenses? Per ATO advice, input tax credits can only be claimed for expenses arising on, or subsequent to, the GST registration taking effect.

"The loss of potential GST input tax credits makes this proactive registration even more important. Losing one-eleventh of sale proceeds and entitlements to input tax credits would be a bitter pill for any breeders, especially in an industry already involving greater risk than most."

He said breeders would not be out of pocket if they were hobbyists and a GST enterprise did not exist at the time of the sale.