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Personality Profile April 2003 Paul
Carrazzo
THE
past 10 years have seen the continuing rise of Melbourne-based accountant
Paul Carrazzo to a place of pre-eminence in the Australian thoroughbred
industry. His climb to national prominence began in December
1993 when he became a regular contributor to The Australian Bloodhorse
Review. Since then he has become a highly respected authority and commentator
on taxation issues affecting the horse industry. These matters include the GST, business versus
hobby, capital gains tax, the new losses rules, mare and stallions write-downs
and horse deductions. This has led to Paul featuring frequently on
Sky Racing’s “Bred To Win” program as well as writing for The Financial
Review and previously for industry publications such as Silks and Breeders’
Forum. In addition he has been a guest presenter at
Thoroughbred Breeders Victoria and South Australian Thoroughbred Breeders
seminars. A major milestone in his career was reached at the beginning
of this year when he conducted a highly successful taxation seminar
at the Magic Millions Sale Complex at the Gold Coast in the days leading
up to the yearling sales. He will conduct another of these seminars at
Medina Executive at Coogee on April 21 as a prelude to the William Inglis
and Son Australian Easter Yearling Sale, beginning the following day. Now a recognised specialist in an area which
remains a mystery to most people involved in the industry, Paul has
built up a wealth of general experience and knowledge over l6 years
in the business. Along the way he gathered his understanding
of the manner in which taxation and business consultation works with
major accounting firms, including Arthur Young (now Ernst and Young).
Although he has directed his attention primarily to horse taxation he
has completed all the educational requirements of a Certified Financial
Planner and became a qualified Financial Planning Specialist with CPA
Australia. “I like to be challenged, and my clients prefer
a ‘one-stop shop’ for their financial requirements,” he said. All this eventually led through to him establishing
his own business Carrazzo Consulting in North Melbourne in 1997. While also providing a general taxation and
business consulting service Paul says he is “very fortunate” to be vitally
involved in the two spheres he enjoys most . . . accounting and the
world of the thoroughbred. “I really love interacting with horse breeders.
One of the most fantastic things about what I do is that I can marry
both my interests, my passion for taxation and my passion for the horse
breeding industry. “As any of my clients will tell you I treat
their horses as though they are my own. I receive a great buzz from
my clients winning Group races and receiving high prices at the sales. “Topically, one of my clients, Pat Donato who
is behind Ruby Bloodstock, won the Blue Diamond Stakes at Caulfield
in February with Roedean. I got as great a thrill out of that - as if
it had been my own horse. “Pat came to me six years ago and wanted to
have his horse taxation placed on the right footing and we’ve become
great friends since, so it was a fantastic thrill to see his dream realised
in the Blue Diamond.” However although he does have a specialist
knowledge of the horse industry Paul also has a number of other areas
in which he is seriously interested, including property taxation. “For instance I don’t think it is well known
that I represent CPA Australia at the ‘Buying a Home’ seminars. Obviously
my knowledge of property taxation is well regarded, but the horses are
my first love.” Paul, who was born in Melbourne of Italian
heritage, puts this down to the fact that he has horses very much in
his pedigree. “There is a connection with horses in almost
every strain of my genetic background,” he says tongue in cheek. “A grandfather Pasquale Carrazzo was a successful
continental baker in Melbourne in the 1940s and 1950s. “Thankfully he was so successful in his business
to be able to buy a racehorse named Dupont for 1000 guineas at the Wright,
Stephenson sales at Flemington in the late 1940s and he won a number
of races including the Kilmore Cup in 1951. “He was thought to be good enough to run in
Basha Felika’s Caulfield Cup that year, which was a great thrill for
my grandfather. “My paternal grandmother is a Ginevra, and
Percy Ginevra a favourite relation, had great fun racing city winners
such as Steel Armour and Bold Selection.” Paul’s father Albert, who was a leading real
estate agent and auctioneer of his era, had a “passionate” interest
in racing and later in life became an enthusiastic breeder. On his mother’s side his grandfather Anthony
Carra, who was a pharmacist in South Yarra, was a “very keen” racegoer
whose only vice was said to be the horses. Also on his mother’s side of the family Paul
is related to the Bongiornos. Among the members of that family is Tony
Bongiorno, who has bred and raced horses such as the second placegetter
in the 2001 MVRC Moonee Valley Cup-Gr.2 (2500m) and VRC Saab Quality-Gr.2
(2500m) Spirit of Westbury. “So every strain in my family has a bit of
a racing involvement,” he said. With that background Paul was, by the time
he was about eight or nine years of age, beginning to memorise and study
the pedigrees of the leading thoroughbreds of the time. “I guess my interest has also been very much
on the breeding side. To me racing is ancillary to the breeding industry,
and I’ve always been a breeding fanatic.” Growing up in the Melbourne suburb of East
Ivanhoe, Paul remembers his first visit to the races was the September
day in 1973 when the tearaway leader Scotch and Dry defeated Dayana
and Zambari in the VATC Underwood Stakes-Gr.1 (2000m) at Caulfield. “I’ll never forget the experience. From there
on Scotch and Dry became a favourite of mine.” On completing his education at Parade CBC,
at Bundoora, Paul was accepted for an accountancy degree at the Royal
Melbourne Institute of Technology. A few days after receiving his Bachelor
of Business degree in 1986 he read a story in The Age newspaper’s “Money”
section containing comments by well known accountant and racehorse owner
Ken Stout on horse taxation. “At that point of time Ken was the horse industry
partner at Arthur Young, the international accounting firm. So I read
the article and thought ‘gee this looks all right’, because I’m passionate
about breeding and I want to get into the accounting profession. “With that I just rang Ken and asked whether
there were any places available . . . and from that I got a position
with Arthur Young. “Ken became my partner in the firm and he remains
a good friend and confidante to this day. Once again the thread continued
as Ken, who you could say was my mentor, is also very active as far
as racing horses is concerned. He’s had some good luck recently racing
Romalpa and Kaemess. “It’s an association which has continued ever
since because I am a part-owner of an unraced two year-old filly by
Ascot Knight in training with Ken’s son Simon at Wangaratta. “Simon has international experience which is
very important, and in my opinion is one of the most promising young
trainers in Victoria, and I am sure he is going to do very well.” As the 1980s progressed Paul began to dabble
in breeding with members of the family. They purchased a Plush mare
named Ultramarine, who was in foal to Brigand, for $8000 at Mark Read’s
Dispersal Sale and the resultant foal was Ultravite who established
a record for 1300m at Sandown. “Ultravite was the first horse we’d bred and
we were very happy that he was a city winner and a record breaker,”
he said. “That got us very excited. “Ultimately Ultramarine became the grandam
of Ultra Smug who won a Pakenham Cup, and finished second to Savrocca
in the Queen Elizabeth Stakes at Flemington a couple of years ago. “We didn’t race Ultra Smug but he was raced
by a great friend of our family in Kevin McMahon. He had a few broodmares
and he would drive me around to the studs when he was visiting them. “I was in my late teens and early twenties
and I was studying at university at the time. It was an outlet for me;
it was great and it certainly helped nurture my interest in breeding.” The Carrazzo family has also received considerable
satisfaction from breeding Prince of Paradise, who developed into a
capable sprinter. After leaving Arthur Young, Paul subsequently
joined the firm of Whiting and Delaney where he was “talked into” become
more active in the horse industry. “The partners saw I had a flair for horse taxation
and they suggested I should actively market myself in the horse industry,”
he said. “That was towards the end of 1993, and as Andrew and Margaret
Reichard will tell you I rang them at The Australian Bloodhorse Review
and said I felt I had something to offer the horse industry. “I said I would like to write regular articles
on horse taxation, which I felt would help both of us. “I faxed an article to the magazine which Andrew
approved. “It was published and the rest is history because I’ve been
writing on a quarterly basis for Bloodhorse Review ever since. “Writing the ‘Tax File’ is a constant challenge,
but it forces me to research and to keep up to date, which is vital
for any tax consultant. I think it has been a fantastic relationship
for both parties.” Six years ago Paul established Carrazzo Consulting
and a year later he married his wife Carmel, and they now have two daughters
Lia, who is three, and Tessa, 10 months. “Carmel likes the races socially, which is
good. She enjoys going racing with my mum Patricia and their friends. “Happily both Lia and Tessa seem to pay attention
to the Sky Channel racing replays, so they both have potential as possible
racegoers.” Over the time since those significant developments
everything has been going smoothly for Paul, his business and his family.
These days his company has clients throughout Australia as well as in
Britain, Hong Kong. Ireland, Malaysia, New Zealand, Singapore, South
Africa and the United States. “Fortunately I had a good client base when
I went out on my own,” he said. “It is always a challenge to build your
fee base, but thankfully everything has gone well. “I certainly haven’t gone backwards that’s
for sure, and this year has been very good so far.” He was especially pleased and honoured with
his Magic Millions seminar. “I was very proud to have been the presenter
of, to my knowledge, the first-ever tax seminar at a major Australian
yearling sales venue. I really appreciated the support I received from
Magic Millions and I think they appreciated the ‘value-add’ to their
clients as a result of giving their support. “The Magic Millions has a very innovative culture,
and I think Gerry Harvey, John Singleton and Rob Ferguson are all aware
of the lack of tax knowledge in the industry. “The company’s chairman Max Donnelly is a fellow
accountant so it was easy to talk them into having the seminar. Also
they saw that a seminar on taxation is a stimulant for investment in
the industry.” Paul said after the success of the Magic Millions
seminar, he could not wait to conduct a similar gathering prior to the
Australian Easter Yearling Sale. “I had noted that a lot of interested people,
many from New South Wales, could not get to the Gold Coast. “The format will be, with some fine tuning,
the same as the Magic Millions which had a great response, so I would
like to think it would work just as well in Sydney. Among the “hot topics” to be discussed will
be the subject of GST and the way this applies to non-residents of Australia,
which in turn has a powerful impact on Australian breeders. At present if overseas buyers are not GST-registered
in Australia, they must export any horse bought within 60 days of purchase,
or pay GST. This is particularly significant when more
than 2000 thoroughbreds are exported from Australia annually, and with
northern hemisphere sales amounting to close to $50m at last year’s
yearling sales. “Sending a horse out of the country within
60 days of purchase can be impractical,” Paul said. “Secondly because of the lack of breaking-in
and pre-training facilities in South East Asia the horses have to be
broken-in and pre-trained in Australia. “Howeverby breaking-in and pre-training them
here you immediately lose your GST exemption. “That is the case even if they are out of the
country within 60 days, because the product has been altered by way
of the breaking-in or pre-training. “However, the way around this problem for non-residents
is to register for GST before they buy horses. “In that case, even if you pay GST, it can
be claimed back which is why the Australian Taxation Office is recommending
that people register to circumvent the 60-day problem. “At the same time the 60-day rule is still
a concern in the industry, regardless of the ATO urging people to register,
because there will still be cases where the GST will apply and there
will be harsh outcomes. “That’s why Thoroughbred Breeders Australia
and Aushorse are lobbying the ATO to amend the provisions. “After all it is a serious trade for Australia
and we need to do everything as possible for overseas buyers. “With issues like this and other matters, any
horse industry player should be mindful that there are a lot of specific
tax issues to do with the horse industry. “Also the ATO is cracking down on individuals
claiming illegitimate horse losses, which is always a catalyst for people
to obtain the right advice on whether or not they are complying. “That’s where I get a lot of my work from other
accountants who refer their clients to me.” |
