Is Gambling Money Taxed in Australia?

(Source – Freepik)

In most countries, when you hit a massive win at any casino, it is considered a part of your regular income and will be taxed accordingly. The tax rates for gambling can be quite high depending on a particular region. Let's just take the US as an example, where taxes can be over 50% of a player's earnings.

In this aspect, Aussie gamers are luckier, as gambling taxation in the country doesn't directly affect the average player. To be more precise, gaming taxes are imposed at a corporate level rather than an individual one. For example, if you play slots at one of the Australian PayID casino sites and get a win of $1,000, you won't be asked to pay a percentage from it as a tax because it's considered a hobby for you.

If you are involved in the gambling business (you own a casino or a betting company) or are a professional gambler, all your income generated from gaming will be subject to taxation.

However, the rate of gambling taxes is different across various states of Australia. According to the Australian government, the highest taxation rates are in Victoria, Western Australia, and South Australia, where gambling revenue is over 30% of expenditure.

On the other hand, New South Wales, the Australian Capital Territory (ACT) and the Northern Territory have the lowest tax rates as in these states, the revenue from gambling is less than 20% of expenditure. By type of gambling, taxation rates in the country vary: 65% on lottery games, 25% on gaming machines, 18% on racing, and 12% on table games.

Who Regulates the Gambling Industry in Australia 

Gambling in Australia is regulated by the Australian Communications and Media Authority (ACMA) at the federal level under the Interactive Gambling Act 2001 (IGA). Overall, the IGA makes it illegal for casino and betting companies to provide some online gambling services within the country. Illegal activities cover:

  1. In-play sports betting;
  2. Online casinos;
  3. Wagering on the result of a lottery;
  4. Sports betting services that work without an Australian license.

However, ACMA is not the only governing body in the country. All gambling activities in Australia are also subject to laws and regulations at the territory/state level.

Each of the eight states and territories in the country has independent and separate gambling authorities. Moreover, you can also find a series of federal statutes that cover various aspects of gaming activities, such as licensing, online gambling, etc. For example, L&GNSW (Liquor and Gaming New South Wales) is the regulator in the jurisdiction of New South Wales and is responsible for licensing and compliance of state casinos.

Criteria for Differentiating Gambling Business from a Hobby

If you are into gambling, and it has become a source of your income, it's important to know whether you may actually be considered a professional gamer or fall into the category of gambling business. Determining this will surely depend on each separate case and its specifics; however, there are some general criteria you can use as guidance. Below, let's have a look at the key points that will help to identify whether a person is in a gambling business or not.

  • Checking whether the gambling activity is conducted in an organized and systematic way: For instance, did the person employ staff, rent an office or maintain records?
  • Examining the scale of gambling operations: This may cover verifying the size and volume of all casino and betting activities.
  • Checking whether the casino activity is principally for entertainment or principally for profit.
  • Verifying whether the selected gambling activity depends merely on chance or rewards for a particular skill: This means identifying whether the player has special professional knowledge and skills associated with the activity or is just a hobby for them.

So, when exactly should you pay gambling taxes in Australia? First, if you register as a business, you will have to pay a certain tax. The amount will depend on the state or territory where you are located. Players will also be obligated to pay taxes if they get any endorsements, paid sponsorships, or other types of gains in their gaming career.

What we can conclude from these points is that gambling, which involves a great element of skill, is more likely to have tax consequences than merely betting on random matches.

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