Did you know that over 80% of adult Australians engage in gambling as a leisure activity making it the most gambling nation in the world? Well, those are shocking statistics considering the social cost that gambling has towards the community which is estimated at about $5 billion per year.But are gambling winnings taxable in Australia considering the huge social burden that they come with? Well, gambling taxation in Australia differs with those of many states, as gambling winners are not taxed even if they win big time. There are three major reasons why proceeds from gambling are not taxed from an individual level and they include:
1.Gambling is not a profession
Gambling in Australia is treated as a recreational activity rather than a profession. Gambling is viewed as a pastime activity that people enjoy for entertainment irrespective of whether they win or lose out.
2.The proceeds from gambling are viewed as luck other than income by the government
The rationale is that even if one wins big money it is not considered income, reason being the number of people that have lost in the gambling session for the winner to take it all. Similarly, another assumption is that even if one wins, he/she has probably lost in a number of other gambling sessions.
3.Taxation is done on a corporate level
The government taxes different gambling operators depending on the laws of jurisdiction of the state within which they operate. There are taxes on different levels such as taxes on the turnover, tax on the player’s net loss and net profit, license fee for operation and business development fee. The major forms of corporate taxation on gambling activities can be summarized as:
Type of taxation Gambling activity that is taxed
Turnover tax: sports betting, wagering on racing, Lottery subscriptions, and draw card subscriptions
Tax on players loss: wagering on racing, sports betting, poker and slots machines also called online pokies, TAB sport betting and keno.
Tax on net profit: poker machines
License fees: racing, lotteries, bookmarkers, poker machines, casinos, sports betting, and minor gambling such as raffles and bingos.
Australia gambling taxation versus the rest of the world
Comparing Australia’s taxation legislation to that of the rest of the world is like comparing night and day. Most states tax the individual winnings be it state lottery or casino win, and it is mandatory and typical for other governments to take their share before the winner receives the price.
The future of gambling taxation law in Australia
With the average Australia spending a whopping seven thousand dollars annually gambling in casinos, horse tracks and other gambling sites, politicians seeks to revise the taxation laws that primarily target the winning proceeds from individual gamers and punters. The politician view this as an untapped gold mine that could significantly increase states’ revenue as well as adding to the country’s income. The proposed gambling taxation has however been received with hostility from many quarters and is likely to shape up Australia’s political scenery in the upcoming elections. The gambling industry has also witnessed the opposition of casino tax decrease as they fear it will negatively impact on them in the long run as it will push away their numerous clients, as well as their prospective clients.