Australian taxes and big wins - what to know
1. Overview of Australian tax practices
ATO General Position: For most recreational gamblers, winnings are not taxed, as gambling is considered entertainment rather than a source of income.
The exception is professional players: if the activity is systemic, organized and commercial in nature, it is considered a business, and the profit from gambling is included in taxable income.
2. Residency and player status
1. Australian residents
Winnings as a hobby: not taxed, not shown on tax return
Professional activities: Gambling profits are included in Section 6-5 of ITAA 1997 as ordinary income.
2. Nonresidents
There is no tax duty on non-residents in Australia, but their home jurisdiction may require such winnings to be declared.
The Australian operator does not withhold tax on payment.
3. Hobby vs business: ATO criteria
The ATO considers a combination of factors; the absence of one does not preclude classification as a business.
4. Declaration and reporting
1. Recreational winnings
Not reflected in the tax return.
Gambling expenses (deposits, commissions) are also not deductible.
2. Professional winnings
Included in "Other Income" or "Business Income" (application of ITAA).
Rates expenses may be deductible subject to proven business (Section 8-1 ITAA 1997).
3. Reporting on foreign operators
If you have received a large win in a foreign online casino, the bank can inform the ATO about the transaction.
We recommend that you consider all incoming and outgoing payments yourself.
4. ATO Notification
There is no mandatory advance notice of winnings. Declaration is only required when classified as a business.
5. Taxes on related payments and services
GST и Turnover Tax:
ATO General Position: For most recreational gamblers, winnings are not taxed, as gambling is considered entertainment rather than a source of income.
The exception is professional players: if the activity is systemic, organized and commercial in nature, it is considered a business, and the profit from gambling is included in taxable income.
2. Residency and player status
1. Australian residents
Winnings as a hobby: not taxed, not shown on tax return
Professional activities: Gambling profits are included in Section 6-5 of ITAA 1997 as ordinary income.
2. Nonresidents
There is no tax duty on non-residents in Australia, but their home jurisdiction may require such winnings to be declared.
The Australian operator does not withhold tax on payment.
3. Hobby vs business: ATO criteria
| Criteria | Hobbies | Business |
|---|---|---|
| Consistency | Random, irregular sessions | Regular strategies, planning |
| Purpose | Entertainment | Profit |
| Level of professionalism | Lack of analytics, accounting | Tight accounting of rates, EV analysis |
| Advertising/Recruiting Activity | None | Maybe Advertising, Educating Others |
| Turnover and rates | Within personal budget | Stable high turnover |
The ATO considers a combination of factors; the absence of one does not preclude classification as a business.
4. Declaration and reporting
1. Recreational winnings
Not reflected in the tax return.
Gambling expenses (deposits, commissions) are also not deductible.
2. Professional winnings
Included in "Other Income" or "Business Income" (application of ITAA).
Rates expenses may be deductible subject to proven business (Section 8-1 ITAA 1997).
3. Reporting on foreign operators
If you have received a large win in a foreign online casino, the bank can inform the ATO about the transaction.
We recommend that you consider all incoming and outgoing payments yourself.
4. ATO Notification
There is no mandatory advance notice of winnings. Declaration is only required when classified as a business.
5. Taxes on related payments and services
GST и Turnover Tax:
- Operators pay Goods and Services Tax (10%) with a commission (rake), but this does not add to the tax burden for players. Tax withholdings:
- Australian casinos do not withhold tax when paying winnings. Gifts and bonuses:
- Gift certificates and promo bonuses accrued as a result of bets are treated similarly - not taxable if you are a non-resident or hobby player.
6. Document accounting and storage
1. Inbound/Outbound Transactions
- Save bank statements and screenshots of casino transactions.
2. Fixing rates and strategies
- For professional status, keep a log of rates: date, time, amount, results.
3. Casino correspondence
- Keep correspondence with support for large payments (checklists, KYC confirmations).
7. Special situations
1. Jackpots and big prizes
- Even when the progressive jackpot (AUD millions) is broken, the resident hobby player pays no tax.
- Professionals declare the entire amount as income and pay the usual income tax rate (with progressive rates up to 45%).
2. Gift tax
- If you donated the winnings to third parties, they may face a gift tax in their jurisdictions.
3. Jurisprudence
- On rare occasions, the ATO challenges hobby status with regular big wins; court decisions are based on test of business.
8. Recommendations to High-Stakes players
1. Consultation with a tax lawyer
- With betting turnover over $1 million AUD or regular gaming revenue.
2. Clear separation of hobbies and business
- If there is a systematic approach (analytics, planning) behind the rates, get ready to declare.
3. Accounting
- Use specialized financial applications to track incoming/outgoing funds.
4. Pre-arrange KYC
- Timely verification simplifies large winnings and document flow.
Conclusion
Australian tax law gives recreational gamblers free access to gambling profits without taxation, but tightly controls professional activities. Large winnings from foreign online casinos require careful accounting, especially if there are signs of commercial activity. A clear understanding of the ATO criteria, correct classification of status, accounting and consultation with a tax specialist will help avoid unexpected obligations and preserve the legality of your High-Stakes game.
