Gambling is a beloved hobby across Australia, where people gamble more per capita than anywhere else. But Aussie players catch a break since their casual winnings aren’t subject to taxes.
On the flip side, seasoned gamblers do have to fork out taxes on their earnings. The Australian legal system has grappled with defining professional gamblers. But for the average player, your earnings can often sidestep the taxman's notice.
Defining a Professional Gambler in Australia
Because seasoned gamblers are taxed, it's important to clarify what makes someone a professional gambler. Australian laws aren't crystal clear on this, which sometimes puts casual gamblers at risk of being wrongly classified.
A deciding factor is whether a person is actively running a gambling enterprise. This aligns with the idea that a 'professional' is someone acting with business intent.
But what tells you that your gambling activities are business-like? Here are three main concerns:
- First, is your gambling activity aligned with running a business?
- Second, do you possess expert-level knowledge in the gambling arena?
- Third, what is the magnitude of your gambling operations?
Together, responses to these questions signal if taxes on winnings are in order.
Are Taxes Due on Your Gambling Winnings?
Unlike players, gambling operators and organizations handle tax differently. Those with licenses under the Interactive Gambling Act 2001 are taxed on their revenue streams.
However, due to court standards, most casual bettors don’t pay taxes on occasional wins. Folks who bet on horses or football now and then face minimal risk. Still, there are specific scenarios to steer clear of.
Firstly, wagering on areas in which you have exclusive knowledge can be risky. For instance, if you work in horse racing, placing bets could risk making you look like a professional. In such cases, consider reporting your earnings.
Secondly, wagering large amounts of money can attract scrutiny. If your betting style is mostly small and occasional, the tax office might overlook you. But frequent large bets, especially if based on strategic models or extensive research, could signal business activity.
