Ontario Racing has voiced its disappointment that the federal government’s 2026 Budget did not eliminate Section 31 of the Income Tax Act, missing a key chance to bolster Canada’s horse racing industry, safeguard jobs and investments, and ensure fairer tax treatment for businesses involved in the equine and agricultural sectors. Despite Budget 2026—titled Masters of Our Destiny—highlighting the value of economic sovereignty and competitiveness, the government chose to keep this outdated tax rule, which discourages investment in Canadian horse racing and places domestic owners, breeders, and racing businesses at a growing disadvantage.
John Hayes, Independent Chair of Ontario Racing, emphasized that at a time when Canada aims to strengthen its economy and retain investment locally, it is critical to remove obstacles hindering Canadian industries from competing effectively. However, he lamented that the budget failed to do so, maintaining tax policies that actually motivate investment to move into the U.S. rather than supporting Canadian horse racing.
Section 31 limits legitimate farming operations by capping the deductible business losses against other income at $17,500 annually. Originally from the 1950s to prevent hobby-farm tax abuses, this rule no longer reflects the realities of modern horse racing and breeding, which require substantial upfront investment and often depend on diverse income sources to stay viable.
This issue impacts the entire Ontario horse racing community—owners, breeders, trainers, stable operators, veterinarians, feed providers, and transporters—thousands who rely on a competitive and thriving industry. By restricting investment and limiting how businesses can manage losses, Section 31 further strains a sector that supports employment and economic activity in many local communities.
The problem has become more urgent given recent U.S. tax changes that greatly favor investment in American horse racing and breeding by allowing immediate 100% deductions of qualifying racehorse costs, widening the competitive gap and incentivizing capital flow south of the border.
Gordon Thain, Ontario Racing’s Executive Director, noted that Ontario’s horse racing directly competes with U.S. states for horses, owners, investment, and talent. Every dollar spent outside Canada represents lost potential to support Canadian breeders and racing enterprises. Removing Section 31 would help create a fairer competitive environment without requiring new government spending or subsidies.
Though Section 31 wasn’t addressed in Budget 2026, Ontario Racing and its Board appreciate the government’s commitment, outlined in Section 6.1, to modernize the tax system and review outdated provisions. With further tax reforms expected in the Spring Economic Update 2027, they see a vital chance to tackle the disadvantages facing Canada’s horse racing industry.
Hayes expressed optimism, saying that building a stronger and more self-reliant Canadian economy involves equipping domestic industries with the tools they need to flourish. He welcomed the government’s acknowledgment that old tax rules require updating and pledged to collaborate with officials to ensure Section 31 is included in upcoming tax reforms. Ontario’s horse racing sector merits fair competition and an equal opportunity to succeed.
Ontario Racing continues to advocate for repealing Section 31 to restore tax fairness across the equine and broader farm sectors. The organization will keep engaging with the federal government and legislators to promote this reform, helping Canadian horse racing attract investment, preserve jobs, and foster rural economic growth.
For additional information on the campaign to repeal Section 31 and bring tax fairness to Canadian farmers, visit fairnessforfarmers.ca.
This article was originally published by Paulick Report on November 6, 2026, in their News section.
Fan Take: This news is crucial for horse racing enthusiasts because fair tax policies directly impact the sport’s growth and vitality in Canada. Removing Section 31 could mean more investment, stronger local racing operations, and a brighter future for the industry that supports countless jobs and the passion of fans nationwide.
Source: finance.yahoo.com
