Are Winnings Taxed in Australia?

You have decided to play pokies for real money at an online casino. And you also have the winning attitude and most probably you win too! But one question that might come to your mind is will your winnings at the pokies play be taxed? Let us find out. Will winnings at pokies games online be taxed?

Most of the pokies players seldom think of this question while playing and straight away jump to play the pokies game online at the casino of their choice. Few players think about being taxed at their winnings but are not sure.

Winning at Poker Games are Not Taxed for Australian Players

For Australian players, the good thing for you to know is that your winnings at poker games are not taxed. You are not required to pay any taxes on your winnings. All gaming be it pokies or casino winnings are completely tax-free.

When you receive an amount of money from a gambling activity, the amount is usually not assessable income unless you are a professional gambler.

In deciding whether someone is a professional gambler, the courts consider issues such as:

  • Whether the activity is undertaken in a business-like manner
  • Whether the person has specialist knowledge associated with that gambling activity
  • The scale of operations.

For further guidance, you can have a look at Taxation Ruling IT2655 – Income tax: betting and gambling – whether taxpayer carrying on business of betting or gambling. 

What if the winnings are coming out of another country where the gaming is taxed?

What if the winnings are coming out of another country where the gaming is taxed
What if the winnings are coming out of another country where the gaming is taxed

The most reputed online casinos are structured in their own way. For Australian players playing at such best online casinos like the Fair Go Casino, you will not be required to pay any taxes on your winnings if brought into Australia even though they are coming out of another country. Even if you hit a Jackpot and win over a million dollars from an offshore casino site you need not pay a cent in tax and all the winning amount is yours to enjoy.

Though in many countries across the globe when you win a big jackpot or lottery, it is treated as part of your regular income, and you are taxed accordingly. This tax rate can be very high, and to make matters worse, your winnings are often doubly taxed due to dual federal and state taxes. More than 50% of your winnings go to the government in the form of tax.

Poker Players are Luckier

Poker Players are Luckier -Will Winnings at Pokies Games Online be Taxed?
Poker Players are Luckier

Australian pokies winners or lottery winners are luckier than a lot of other players around the world. Gambling taxation in Australia does not affect the average Australian winner directly as gambling taxation is effected on a corporate level, not an individual one. This is very different from many places around the world, As an example in the United States, the winner pays the taxes on the winning prize. Many countries that levy taxes on winnings winners will not tax small amounts.

The line between a small amount and a large amount is arbitrary and varies from country to country. In many states of the United States, it is around $600 and winners of that amount and less can take all their winnings tax-free. But after that line is crossed and the winnings become “large” or significant, the taxes can be a big amount.

Why Australians are exempted from taxes on winnings from casinos

Why Australians are exempted from taxes on winnings from casinos - Will Winnings at Pokies Games Online be Taxed?
Why Australians are exempted from taxes on winnings from casinos

The Australian government views such winnings differently than many other countries. And this is the cause of the different approaches to gambling taxation. Though many countries, like the United States, view such winnings as income, Australians view it as sheer luck. The rationale for this is simple. When people play and bet – whether on the pokies, or playing poker, or blackjack or craps or whatever. Most of the time, they lose. Betting on these games makes more money come out of the players rather than winnings. Also, when people do win, they usually don’t win large amounts. Therefore, players betting on these games and winning cannot be an income. Because it’s making people lose money more than making it.

Players’ winnings are not taxed as income is that “betting on these games” is not considered a profession in Australia. But it is considered a pastime or a hobby and a form of entertainment. Players mostly play for the enjoyment that it offers rather than the possibility of any winnings they might make.

Gamblers playing not for recreation but for money also are not taxed.

Players playing not for recreation but for money also are not taxed
Players playing not for recreation but for money also are not taxed

Such players work systems to reduce their losses and increase their winnings as much as possible and generally do considerably better than those more recreational players who do not pay attention to systems or patterns and just play, sometimes winning and sometimes (more often) losing. Even these types of “professional” players are not considered their profession. As if it was a profession, would the “professionals” be able to write off any of their losses on their taxes? Very unlikely.

Case laws on taxes on wins in Australia

In Australia winnings at casinos are already taxed. It is taxed at the corporate level in Australia, with online gaming sites and casinos paying the taxes and the individual avoiding them. So the governments collect taxes on the revenues of the casinos, pubs, and clubs which offer betting games.

In recent years, the states of Australia collected about $3 billion per year on revenues from pokies. This accounts for roughly 2/3rds of the taxes collected, out of a total of about $4.6 billion.

Playing Poker is popular at Casinos

Playing Poker is popular at Casinos
Playing Poker is popular at Casinos

In Australia playing pokies games and playing at Casinos is quite a popular trend. On average Australians spends nearly eight thousand dollars a year on betting– including online sites, in casinos, and on sporting events such as horse races or greyhound races, or football games.

Thus at the international level, this is well above average, and this incredible popularity of betting in all its forms creates quite a powerful lobby group that can fight any efforts by politicians to increase/create taxes on individual gambling winnings.

Even the Casino owners are always in favor of not taxing Australian players because if they will share their burden of tax on players they fear might lose the customers who visit their online casinos and are regular players.

What about use of crypto at online casinos?

Rich Palms Casino – Bitcoin casino for Australians

These days crypto currencies like Bitcoins, Litecoins, Bitcoin Cash and other such digital currencies are on the rise to play real money games at online casinos. Considered as Crypto gambling where everyday crypto users can place bets online using popular digital currencies for a chance of winning. There are two categories of crypto gambling:

  • Placing bets directly in crypto.
  • Funding your account on a gambling platform with crypto.

Using crypto for gambling is preferred by some users because:

  • It can be simpler and faster than traditional methods of casino gambling.
  • You can withdraw and deposit directly from a digital wallet to online gambling platforms.
  • It can be fun and entertaining.

The popularity for crypto casino sites is on the rise, as users can bypass the traditional methods of gambling using fiat currency, and instead use crypto assets to bet online at the click of a button.

Examples of crypto wins and taxes

In Australia as said above your wins at crypto casinos are not taxed if you are playing in Australia and you are not a professional gambler and you are not using the currency for investment. You may not need to report your crypto gambling winnings on your taxes. Still make sure to contact a local tax accountant for confirmation. However, you will want to still keep a record of your winning transactions, so that you have the necessary information to calculate your crypto capital gains or losses at the time you sell or swap the assets. 

Crypto currencies

The important takeaway here is that only the win or loss from the gambling activity itself is free from tax. The crypto used in the gambling activity is usually still taxed. Here’s an example:

  • Satoshi holds 1 BTC for investment.
  • Satoshi places a 1 BTC bet and wins, getting an additional 0.5 BTC (worth $10,000 AUD at the time):
    – The $10,000 is not assessable income, as it is from a gambling activity.
  • Satoshi continues to hold the 0.5 BTC for investment and later sells it for $12,000 AUD:
    – The disposal of 0.5 BTC is a CGT event, that will result in a gain of $2,000 AUD that must be declared.

The important takeaway here is that even if you win crypto from gambling, if you hold the crypto for investment, there will be capital gains tax implications that must be calculated and declared to the ATO. If the crypto you won from gambling later goes down in value, you may also be able to claim as a capital loss.

Bitstarz casino Bitcoin Bonus

But in US all crypto wins are taxed.

According to token tax site when received, crypto gambling winnings are taxed as ordinary income at a federal and state level; your tax rates depend on your gross income, but range from 0 to 37%. If you have gambling winnings from a U.S.-based operation, typically a flat 24% will be withheld by the payer; these are estimated taxes, and you may owe more or less depending on your personal circumstances. 

However, crypto casinos and betting sites will not make this automatic deduction for you. You need to report gambling winnings as “other income” on your Schedule 1 Form 1040. 

Additionally, when you sell or trade your crypto gambling winnings for fiat or another coin, you will report and pay crypto capital gains taxes on any increase in its value. Bitcoin gambling income is taxed at its fair market value when it is earned. For example, if you won .25 BTC from a sports bet when BTC was valued at $30,000, you would report $7,500 of taxable income.

When you sell or trade crypto gambling winnings, you are realizing a capital gain or loss on the difference in the asset’s value when you acquired it versus when you disposed of it.  The capital gain (or loss) you report on your taxes is equal to your total proceeds minus your cost basis. Your cost basis is the price you acquired the asset for, plus any applicable fees.

So relax and be assured that your winnings taxed in Australia have certain criteria and if you don’t come under you are not taxed.

About the author

Kamal Kaur