Gambling Losses Tax Deductible Australia
Firstly, gambling losses would be deductible where the gambler's activitiesconstitute a business. If a taxpayer is found to be in a business ofgambling, the proceeds of that business will be assessable income under s.25(1) of the Income Tax Assessment Act (ITAA) (1936) (Cth)19. Total income includes both assessable and net exempt income for the year. If you make a tax loss in an income year you can carry it forward and deduct it in future years against income for tax purposes. Certain deductions cannot be used to contribute to a loss. A tax loss is different from a capital loss. Conditions differ for calculating tax losses for Australian and foreign residents.
You might be wondering just how the Australian Government and tax office treat punters and their winnings. Well, our gambling laws are very player-friendly, but there are still a few things worth knowing about how tax works for gambling. We have shared in this article a few shocking pieces of information worth keeping in mind.
The Current State of Australian Gambling
It is no secret that Australians are some of the most enthusiastic gamblers, spending over $209 billion each year.
This figure is steadily increasing each year, and when it comes to the actual losses, Aussies lost over $24 billion each year.
This might not seem as much in the overall scheme of things, and that would be a subtle assumption if Australia did not have such a small population. These losses work out to be an average of just over $1250 per Australian adult!
Problem Gambling
When you look into the statistics, the data is not a pretty sight.
In fact, in the 2016/2017 financial year, poker machine expenditure was the biggest generator in the gaming and sports betting industry, at a whopping $144 billion.
What is worrying is that the per capita expenditure on gambling was about $11,000 per adult. This amount also includes total turnover, which more often than not included ‘reinvestment’ of gamblers’ ‘winnings’.
Do Australian Gamblers Pay Tax on Casino Winnings?
The gambling activities of Aussie punters and gamblers are not taxed on winnings in Australia. It doesn’t matter what form of gambling you are participating in if you are in Australia, and you report your income tax to the Australian Taxation Office (ATO) you will never pay tax.
This is not the case for other countries though, for example, the USA, France, and Spain all charge tax to the player on their winnings.
In Australia, the government has regulated gambling extensively, however, taxes the operator or company (so the casinos or sportsbooks) rather than the player. The ATO takes this approach because they consider that any players that are lucky enough to win through gambling do so as a result of a lucky windfall and therefore is not seen as a sustainably generated income.
Online Gambling Sites and Tax for Aussie Players
Online casinos have become a big money maker and for those playing online for real money, whether through the pokies or in online poker tournaments.
As more players register accounts with online casino games operators, there is more pressure on the Government to crack down on gambling and further regulate the industry – which is also an attempt at reducing the number of dodgy online casinos, which we shared our tips to avoid these sites.
But for now, Aussies are still in a good position because just like gambling in brick and mortar casinos, the winnings that a player receives from online gambling sites do not need to be declared as income to the ATO.
These online casinos do have strict rules when it comes to operating and attracting Aussie punters for online gaming. For example, these websites cannot be operated from within Australian waters. If you haven’t checked em out yet, there are plenty of great online casinos for Aussies which we have reviewed.
Do Professional Gamblers Pay Tax in Australia?
The whole concept of being a professional gambler or making your income purely from gambling or sports betting is a bit of a grey area.
It is tough to generate the type of income needed to support yourself financially through gambling. But in saying that, it can be done and is more achievable for the average Australian through sports betting which we recently discussed here.
Gambling Losses Tax Deductible Australia 2020
In terms of paying tax in Australia, it is possible (given the definition of paying tax on your income). However, good luck ever being classified as a professional gambler with the ATO. in fact many professionals attempt to be acknowledged as a professional because they want to be able to claim lost money as tax deductions.
Gambling Losses Tax Deductible Australia 2019
Why this is such a grey area is because the ATO does not want people to be claiming lost money as tax deductions. There are more losers than there are winners in casino gaming and sports betting, and when it comes to taxing the companies as opposed to taxing players – they make a lot less money taking cash from players.