Apr 19, 2017 Happy tax season, Canada! You have a little over a week to get your taxes filed and poker players are in their annual confuddled state, trying to figure out exactly what the law states about poker winnings. If you don’t play professionally, the answer is easy.
Wed, Jun 27, 8:10pm by William Brown
Last Updated Wed, Jan 8, 7:06am
Australia has one of the highest rates of gambling in the world, with more than 80 per cent of Australian adults engaging in gambling of some kind. This includes four per cent of the adult population who play poker machines once a week. Traditionally, gambling has been legislated at a state and territory level, rather than by the federal government. There are numerous Acts in each region that outline information about gambling tax laws and regulations.
History of Gambling Tax Legislature
In Australia, the winnings from gambling are not taxed. This is for three reasons.
Gambling is not recognised as a profession in Australia. It is regarded as a hobby or recreational activity. The Australian government has come to an agreement that the gains from gambling activities are often the result of good luck, not hard work.
Even if someone wins big, many people also lose a lot in other gambling sessions. Skilled professional gamblers, such as poker players, who could argue their winnings are the result or skill instead of luck, haven’t been asked by the government to pay taxes on their winnings.
If the player decided to register themselves as a business though, they might be required to pay tax. If the player received sponsorships, endorsements and other gains because of their professional gambling career, then this would be taxable.
Who Pays The Gambling Tax in Australia?
The main reason behind the lack of taxation on gambling winnings is that the gambling operators are taxed instead. This taxation differs between the regions.
There are taxes on the turnover amount, on player loss and on net profit. As such, gambling operators need to obtain a license to offer their services, with certain fees paid during the development of the operation. The operators’ requirements to pay tax differ based on where they are operating and what form of gambling is offered.
For example, in the state of New South Wales, tax on electronic gaming machines in casinos is between 16.41-38.91 per cent of gross revenue, depending on the gross revenue.
This is different to the state of Victoria, where the tax is 31.57-51.57 per cent of gross gaming venue.
What are the Online Gambling Tax Rules in Australia?
In Australia, the Interactive Gambling Act (2001) governs the rules and laws about online gambling. This is a national law and was passed by the Australian Parliament on June 28, 2001. The Act is targeted at online gambling operators, making it an offense for them to offer ‘real-money’ online interactive gambling to residents in Australia.
That hasn’t done much to stop Australian’s spending big online, with $800 million spent by 2010. Accessing and using interactive gambling services is not an offence in Australia. It is also permitted for companies based in Australia to offer their services to gamblers located outside Australia, with the exception of those countries that were called ‘designated countries’. Australian punters benefit from not having to pay tax on their gambling winners, but when online gaming is concerned, there aren’t many Australian providers.
Since few are based in Australia, there is a foreign transaction fee that users will have to pay to make a deposit or withdrawal. This is dependent on what kind of banking method you use.
For example, Mastercard and Visa will always charge a foreign transaction fee, whereas Skrill, won’t charge one. There is also the issue of currency conversion to be aware of and some of the best casinos available might not offer the option to play in the Australian dollar.
Do Players Have to Pay Any Gambling Tax in Australia?
In Australia, it is the gambling operators that are charged tax, not the players. The amount of tax the operators pay depends on the type of game and the location of the poker machines or casinos.
There is no tax to pay for online Australian players either, despite a few online Australian casinos in operation.
The only fees or charges a player might encounter when playing an online casino could be fees to withdraw or deposit money into international casino sites or when converting the Australian dollar into the website’s preferred currency.
California state tax do poker tournament winnings get taxed on gambling winningstaxes on winnings calculator
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Paying Taxes as a Poker Player
PODCAST EPISODE 01827
1
It’s quite challenging to get excited about taxes. But for poker players, this week’s podcast has something to be excited about: A clear breakdown of how to pay taxes as a poker player.
If you Google for the answer, you’ll get lots of conflicting and jumbled advice from a variety of experts and amateurs. It’s enough to leave you wishing you could sit down one-on-one with a tax attorney who has experience doing taxes for poker players.
Luckily for our listeners, coach Doug Hull’s associate Ray Kondler from Kondler & Associates CPAs is a poker accountant extraordinaire. He’s been doing our taxes here at Red Chip, as well as Hull’s personal taxes, for many years. His firm is known as one of the leading tax processors for poker players across the country. He was kind enough to sit down with us and discuss the ins and outs of what the government needs to hold from your hold ’em profits.
Ray discusses the pro vs. recreational concept as it relates to taxes, US Taxes for non-US players, and other important details that every poker player should know.
Featuring: Hull, Kondler Update Required To play the media you will need to either update your browser to a recent version or update your Flash plugin .iTUNES
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Current Are Gambling Winnings Taxed? @themotleyfool #stocksSweden
A government crackdown in 2014 pretty much put an end to the online high-stakes crew who were raking in millions online and evading tax on their earnings (.9 million being the figure bandied about!) with fines reported to be in the 6-figure ballpark (in $US!).
Below - Martin Jacobson won million at WSOP
Sweden doesn’t tax winnings from sites licensed in the EU, meaning sites operated from Malta or Gibraltar are not affected, but most of the players affected were obviously playing elsewhere.
In any event, at present the Swedish government charges a massive 30% of tax on gambling winnings from casinos and sites outside the US. Some tournament can see as much as 50% tax on them, which makes it similar to the Norwegian model (i.e. not the best place to be gambling and paying tax).
Again, more detailed info on Swedish taxation can be found here .
Below - Stockholm at sunset
Understanding Poker, Taxes, and Staking
by zenman | Mar 6, 2010 at 9:45 am | Features
As April approaches, poker forums begin to clog with questions regarding taxes. For people who back other players or who are themselves backed, the questions can be even more complex. In this article, we offer an overview of what poker players, at a minimum, need to know about their tax liabilities.
Please note that this article shouldn’t be construed as professional advice, and that, before you do anything regarding taxes, you should consult a CPA or other tax professional.
If you have never filed income taxes before or are not somewhat familiar with how income taxes work in the U.S., you might find it helpful to review either how stuff works or wikipedia’s version of income taxes. If you know what form 1040 is, know what a W-2 is, and what withholdings are, then you can probably skip that intro.
What poker income is taxable?
If you are required to file taxes (probably 99% of U.S. citizens reading this are), basically all the money you make in poker is taxable. It doesn’t matter if it’s online or live. Live results for tournament wins in excess of ,000 will be reported to the IRS by the casino putting on the tournament, so the IRS knows about it whether you put it on your taxes or not, but that’s the only difference. Online wins would be more difficult for the IRS to know about if you don’t report them, but in that case you are evading taxes and will be subject to fines, penalties, and even jail.
The myth of withdrawals
There is a myth many online poker players still seem to believe in; that you are supposed to pay taxes on withdrawals. But deposits and withdrawals are not what the IRS is interested in or concerned about. The actual wins and losses are the records you need to keep. This myth probably came about by someone trying to evade their tax burden, thinking that the IRS will have a hard time proving you made money online unless you withdraw it to your bank. While this may be true, it is quite a risk and certainly not advisable.
So if you play a poker tournament on December 31, 2009 and win 0, that 0 is taxable when you file your 2009 income taxes. It does not matter if you leave the money in your account, or even if you lose that money on Jan 1 playing a 0 tournament. The 0 must be reported as income for 2009.
How do I file my income as a poker player?
There is no generic answer. The real answer is to hire an accountant to advise you. However, it’s good to have some knowledge yourself so that you can know what questions to ask your accountant, and what type of questions to expect him to ask you. If he doesn’t seem to be asking you the right questions in order to get your information accurately, then he may not be the right accountant for you.
It’s much like going to the doctor these days. If you have a headache, dizziness, and memory loss, you are going to look up those symptoms on the internet before visiting the doctor so that you know the right questions to ask her or know what questions she should be asking you in order to form a diagnosis. If she just says you don’t have a temperature so you’re healthy, you know she isn’t really providing you with good service and that you need to find a different doctor. The same goes for your accountant. The better armed you are with knowledge, the better he can help you.
The role of the accountant/tax preparer
Their role is to help you make sure you are within the letter of the law as far as the tax code goes, but they are also there to help you find the best ways to use the tax codes to allow yourself the most deductions and pay the least tax possible. The tax codes in the U.S. are ridiculous. At last check it was a 25 volume set encompassing over 67,000 pages. Nobody can know all the nuances, not even an IRS agent. But a good accountant can know of ways you can legally pay less tax than the next guy without having to sweat the IRS, sort of a manipulation of the tax codes to suit you. So a good accountant may often wind up paying for himself and then some by the money he saves you.
Where can you find a good accountant? Well, it’s tough to say, but at least you can have some idea of what questions he should be asking you before finishing your taxes. Ask him what his experience is with gambling income, particularly if poker is most of your living. It may be difficult to find the right accountant for a professional gambler as it has not been a common need in the past.
So where do I report my poker income?
Again, refer to your accountant, who will know more about your specific situation, but in general there are two main ways to file taxes as a gambler.
You need to first figure out if you are a professional or a hobbyist. As a rule of thumb, if you have a job that is the major part of your income then you are more likely a hobbyist. If poker is your main source of income then you are more likely a professional. If you are still a student, you may have more of a choice of how to file. None of this is set in stone, but more of a general guideline.
Filing as a hobbyist/amateur
There are three major issues with filing as a hobbyist
1) You can’t just net the total net profit. You have to report winning sessions separate from losing sessions and you must itemize deductions for those losing sessions. The money made from winning sessions goes onto one line of form 1040 (generally line 21), then you use a spin-off form (Schedule A, itemized deductions) to deduct the losses (Line 40 of 2008 form). This is the same line used for standard deduction, which you aren’t entitled to if you itemize. If you don’t own a home this fact probably costs you money by missing out on the standard deduction. If you own a home then you likely are using itemized deductions anyway so it doesn’t affect you negatively.
2) Your adjusted gross income (AGI) becomes inflated. This is because AGI is calculated at the end of side one of the 1040, after you add in your winning sessions, but before you subtract your losing sessions on schedule A. This makes it seem like you made a lot more money than you actually did, and often means you miss out on certain economic stimulus programs, medicals deductions etc. that have income limitations or stipulations attached to them. Many income limitations for federal programs are based on AGI which will be much higher than the money you actually made if you are a high volume poker player.
3) You cannot deduct for business expenses related to playing poker like a professional can.
While these three issues may all point to the professional having the better of the deal, the negatives associated with the hobbyist way of filing is sometimes more than made up for by the fact that you do not need to pay the self employment tax that the professional must pay.
Filing as a professional
As a professional your accountant will typically file a Schedule C, business income. For professionals, wins and losses can normally be meshed to come up with an overall amount won for the year. Session records still need to be kept, but winning and losing sessions don’t need to be reported separately. After figuring out how much you netted for the year, your accountant will deduct certain business expenses, and only after all that is done will the amount be reported on the 1040 form. This will result in a much lower AGI, and no need for a Schedule A unless you have other itemized deductions like owning a home, so that leaves you eligible for more of the economic stimulus programs and also for the standard deduction amount. Sounds like a good deal and results in a much less “income tax” paid by the professional than the hobbyist. However the professional is hit with “self-employment tax”, which is added to the income tax amount and reported on the 1040. This often results in a higher overall bill for the professional than the hobbyist.
What kind of business deductions can I take?
Ask your accountant. The more he seems to ask about your poker business, the more deductions he is likely to be able to find. Often parts or all of the expenses for books, training sites, internet, computer, space in the home used for work, travel expenses etc. can be deducted. There are literally hundreds of possibilities and this is where an accountant can really earn his salary for you and be worth more than you pay him. If he is willing to take a long time asking you questions about your poker business, it is in your best interest to tell him as much as you can. Ask him about anything you spent any money on throughout the year. Also, remember to keep receipts.
Estimated tax
If you wind up paying a high amount of taxes at the end of the year, the government generally requires you to file estimated quarterly statements. There are exceptions but in general anyone who can reasonably expect to pay ,000 or more in taxes should be filing these estimated quarterlies. There isn’t much paperwork associated with them; basically it’s just a form telling the government how much money you are sending them. The government requires this basically because they don’t want to wait till April 15 the next year for the money. Quarterly statements estimate what you expect to pay for the upcoming year and you send a quarter of that amount in every 3 months. For instance if you pay 00 in tax liability one year and can reasonably expect to pay somewhere in that range again the next year, you would generally be required to file quarterly statements and send 00 in every 3 months. When you go to file your next year’s taxes, you will deduct the amount you sent in on the quarterlies from the amount you must send in at that time. If you sent in too much, you’ll be entitled to get a refund. Again, this is very general so speak to your accountant about your particular situation.
Session records to keep
Keep a record of each session played including date, place, table, and amount won/lost. As far as what constitutes a session, this is about as clear as the government’s definition of “illegal internet gambling” on UIGEA. In other words it’s not clear.
One thing is your record of sessions won’t generally be seen by the IRS unless you are audited. If you use a reasonable method it will likely be accepted. Poker accountant Russ Fox (listen to interview here ) suggests for cash players that a reasonable definition of a session is from the time you sit down to play until the time you get up, whether it’s online or live. See his article on sessions here .
For tournaments however, it’s more of a grey area. Russ Fox suggests that every tournament is an individual session, even online. This means the win from a SNG must be reported as one session and the loss from an MTT a different session, even when you are multi-tabling and there is some overlap in the timing played.
One thing the IRS is very clear on is that these session records must be kept contemporaneously. In other words, you can’t go back and figure them out later. You are technically supposed to write them down at the time they incur. If you keep them online in excel you should have them printed out. Also it may be possible to use some of the tracking software to keep these records and then you write down the results, but you should know that the language of the code is that they be kept contemporaneously. The IRS does not accept computer files, everything must be hand written or at least printed out.
Perhaps the more amazing thing is that these records are likely never to be seen by anyone except you. You aren’t required to send them in, and likely will only need them in the case of a tax audit. As far as how long you need to keep these records, again tax codes aren’t the clearest so consult your accountant, but generally the answers you’ll find in research is anywhere from 3 to 7 years. See “how long am I required to keep records of my tax deductions” here .
Am Iat risk of going to jail?
According to Tax This, An Insider’s Guide to Standing up to the IRS , Scott Estill , says “The IRS has the very difficult task of trying to uphold the federal tax laws by encouraging the highest degree of voluntary compliance with the tax laws and regulations. Their mission is to ‘ provide America’s tax payers top-quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all’ ”
In other words you aren’t going to be sent to jail over a reasonable interpretation of what constitutes a session, or a reasonable interpretation of a deduction. The IRS is mostly interested in money. So as long as you aren’t evading taxes by “forgetting” to report that 20k win in WCOOP, you are probably at no risk of being sent to jail. However, if you are audited and have made certain deductions that they determine are disallowed, or your tax increases due to their definition of a session, you will have to pay the difference plus interest, and usually a penalty as well.
Also, if an IRS agent comes to audit you, the agent may well have as little experience in auditing a professional poker player as you have experience being audited. And even he doesn’t know all of the tax code nuances. Also you may find the IRS is more willing to estimate and negotiate a settlement than you may think if you are armed with a defense that could put up an honest fight. Unless we’re talking about millions of dollars, they are more likely to negotiate with you and move on to the next guy if you seem to have your records in order. So if you arm yourself with a tax attorney in the event you get audited, likely you won’t have too much to sweat.
The one caveat is we’re talking about mistakes of interpretation or honestly mistaken omission. We’re not talking about forgetting that you made k on Pokerstars last year. If you have a k a year job and two Porsches in the driveway you’ll have to explain that, and likely won’t find the IRS as forgiving.
Does the proposed regulation of online gambling affect my taxes?
There is sometimes confusion when we hear the recent talk of regulation of online poker. The “tax” they talk about there is basically a fee that will be charged to the sites, which could be a licensing fee or a fee per deposit. But it has nothing to do with income tax.
As a separate issue it’s possible the government may ask the regulated sites to provide them with information about individuals and how much they win, but this wouldn’t change the tax you are liable for at all, it would only change the fact that the income is being reported to the government by the site and make it more difficult for tax evaders to skip out on their share of the tax burden.
Is staking also reported?
It’s income, so yes it should be. Once again, your accountant should be able to help you with this. Most likely he’ll advise to file a schedule C for this, particularly if you are doing any decent amount of staking volume. He may advise to do separate schedule C for playing and staking. Or if you are filing as a hobbyist for playing, he might advise a schedule C as a staking business. In this way, it is possible a hobbyist can deduct some expenses that he couldn’t earlier.
What about setting up a corporation?
This depends on many different factors of your poker income, business, life, etc. Consult your accountant.
State income taxes
As far as states go, the codes vary widely. In many cases they will be pretty straight forward. The most important nuance, however, is that in several states, gambling losses are not deductible. That means if you are living in one of those states and file as a hobbyist, you could be in for a very large state income tax bill. Consult your accountant for further information on this. Some of the states to be concerned about are listed in Russ Fox’s blog March 1.
So what happens when I win a live tournament?
For the most part, there is no difference whether you win money live or online. Both are income, both are taxable the same way. The only difference is if you win money in a live tournament in excess of ,000 (actually must be ,000 more than the entry fee) then the casino will issue you a W-2G form, which is the form for gambling winnings. This form is issued by the casino and contains your social security number on it, and a copy is sent to the government. However, the casino does not actually withhold any money from you. They are simply following regulations by reporting that you won that amount in a poker tournament.
The real difference is that the government knows to expect that you will claim this amount as income, whereas when you win an online tournament nobody is reporting that information to them so they do not know to expect it. For instance, say you only played 2 tournaments all year, one online and one live and after the buy in is deducted you profited ,000 in each. Along with your tax forms you would submit a copy of the W-2G which shows the ,000 profit from live but you would claim ,000 total as gambling income on line 21 (assuming you are filing recreationally). While you could omit the online result and the IRS might not find out about it, you are evading taxes which is a criminal offense and are taking a major risk. You could not, however, omit both and get away with it as the IRS will realize they have a W-2G under your name sent to them by the casino and yet you make no claim of it on your taxes. They would know very quickly.
RunningBAPsand taxes
The standard was set originally on PTP at taking 25% tax from live BAPs for taxes. Likely it comes from page 3 of instructions for W2G : Withholding You must withhold federal income tax from the winnings if the winnings minus the wager exceed ,000. Withhold 25% of the proceeds. This is regular gambling withholding.
This is the instructions to casinos telling them how to handle gambling wins. It means that the casino must keep 25% of the money and send that money to the IRS instead of giving it to you when you win more than 00. However this is overridden by later instructions on page 4 that are specific to poker: 4. Poker Tournaments File Form W-2G for each person to whom you pay more than ,000 in winnings, reduced by the amount of the wager or buy-in, from each poker tournament you
have sponsored. Winnings and losses of the participant from other poker tournaments you have sponsored during the year are not taken into account in arriving at the ,000 amount.
Withholding and backup withholding. If you file Form W-2G for the person to whom you pay more than ,000 in net winnings from a poker tournament, and provide a copy of Form W-2G to such person, regular gambling withholding does apply to such winnings
This basically overrides the general gambling policy of 25% withholding and means that as long as you provide your social security number then the casino does not actually need to keep the 25% to send to the IRS. Instead they withhold nothing, and just file the W-2G form. It then becomes the player’s issue as to his end of year tax liability. The actual amount you need to pay at the end of the year will vary greatly depending on many factors such as how much other money you make, whether you file as a pro or not, if you own a house, yearly medical costs, a dozens of other factors. Form 5754
A lot of people ask about this and think it is a magical answer for backers. Most casinos won’t issue these forms and it’s easy to see why. According to the instructions for w2g/5754 published by the IRS, 5754 should be filed by the casino “ when the person receiving gambling winnings subject to reporting or withholding is not the actual winner or is a member of a group of two or more people sharing the winnings, such as by sharing the same winning ticket .”
Obviously this is open to interpretation, and certainly it’s possible that the staking we do on PTP may not be interpreted to fall under this category. Also, you would clearly need the Social Security #s of the people when you collect the winnings, not at some time afterwards. And it seems likely that the casino would have to verify this info, in other words these backers would need to be present to provide identification at the time. So it’s probably understandable why Harrah’s/others won’t file these.
BAPsand taxes:What’s fair for backers?
Realistically anyone doing any substantial backing should be filing taxes at the end of the year on his profit as a backing business. If he makes money from a player and that player takes taxes from the winnings, the backer would wind up being double taxed unless that player is providing some sort of legal documented proof that the tax had been paid that the backer could send in with his tax forms. As to what would constitutes that proof, I wasn’t able to find any appropriate form the IRS issues for this type of activity (not sure a 1099 would work), though one may exist. A signed letter isn’t going to do it, nor is a link to a web site or your BAP ad. The IRS does not deal with computer files or links; they’d want to see the appropriate form. Either way, it’s probably less hassle for the player to keep the appropriate records that he sent the money to the backers pre-taxed than it would be to prove he paid the tax on the backer’s behalf.
Withholding of 25% seems pretty absurd for a player especially if he is running multiple live BAPs. As a for instance, say a player runs a live BAP and profits 100k, and withholds 25k for taxes. The rest of the year he loses 90k in the rest of his BAPs. He can show the IRS documented proof that he won 100k and lost 90k, so his tax liability end of the year will be based upon that 10k profit, so in essence he has collected 250% for taxes.
The real truth is with backers changing and the horses tax liabilities being subject to so many variables, there is no way to keep an appropriate amount for taxes, as you will never know what amount that is till the end of the year.
The only fair way really is to send money to backers in a pre-tax form. In truth, horses do this all the time when they win on the internet. Winning live is no different. Again, the only difference is that the casino files a W-2G form for the total amount won.
How do I protect myself as a player when I get a W-2G?
The casino says you won 20k in a tournament, but in truth you were backed and sent 10k to backers. This is where you absolutely must have an accountant. He will be able to make sure your ass is covered. He will advise you what you need from each backer. Likely you will need personal information from them including name, address, and social security number. When dealing with foreign backers, again it’s messy and your accountant will advise you best. Theoretically we should be doing this for every BAP or stake we run, be it live or online, though clearly that is pretty impractical.
As long as backers are willing to provide this info and to help with the cost of the accountant’s time, there is really no need to ever withhold taxes from a win whether it is online or live. If they can’t, or if it is too inconvenient for them, then it seems appropriate that you withhold tax from their share of the winnings.
Conclusion
The world of poker and the world of taxes don’t mix well. The world of staking and the world of taxes is ten times worse. When you are dealing with record keeping, wins, makeup payments etc. it seems nearly impossible to get everything correct. Again, this is why you hire an accountant to advise you and keep you abreast of what records you need to keep for your particular situation.
Sources/resources: How to Pay Zero Taxes , Jeff A. Schnepper
Tax This, An Insider’s Guide to Standing up to the IRS , Scott M Estill
IRS homepage
IRS Instructions for w2-g and 5754
Lear & Pannepacker, LLP
Deuces Cracked podcast with Russ Fox
Russ Fox website
The Gambler Guide to Taxes, Walter Lewis
Chuck Humphrey’s Gambling Law site
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With regard to the money made from playing poker (either online or live cash games at the casino): I've read on poker forums that in Australia, this income is not taxed. Accountants – do you have experience in this area and can you confirm this?
If indeed it isn't taxed, would I still need to keep records of my earnings/losses from player poker? E.g. for online poker, I could provide data from my tracking software. For live results, I could show them my Excel spreadsheet.
Thanks in advance.
User #660252 5458 posts Mao Whirlpool Forums Addict reference: whrl.pl/Rerhla posted 2015-Oct-30, 11:13 am AEST ref: whrl.pl/Rerhla posted 2015-Oct-30, 11:13 am AESTDo you even earn enough that the ATO will get sus? Definitely keep receipts in-case the ATO questions how you got the money. But isn't he Casino a pit people throw money into?
User #506122 11820 posts Yogie B Whirlpool Forums Addict reference: whrl.pl/Rerhm2 posted 2015-Oct-30, 11:20 am AEST ref: whrl.pl/Rerhm2 posted 2015-Oct-30, 11:20 am AESTIt depends on if you are a professional or not.
Is that you're only source of income? Is it regular, frequent etc.
If it's every day/week and it's how you earn a living, then yes it's taxable.
If you get lucky every couple of weekends then no, probably not.
User #96204 518 posts MarcusAureliusMaxima Whirlpool Enthusiast reference: whrl.pl/RerhnM posted 2015-Oct-30, 11:23 am AEST ref: whrl.pl/RerhnM posted 2015-Oct-30, 11:23 am AESTThe tax office would love to include winnings from all sorts of gambling as taxable income but it would open them up to people claiming deductions for costs – and we all there are more losers than winners at gambling.
User #604283 1483 posts cleary89 Whirlpool Enthusiast reference: whrl.pl/RerhDn posted 2015-Oct-30, 12:26 pm AEST ref: whrl.pl/RerhDn posted 2015-Oct-30, 12:26 pm AEST100% no. gambling winnings aren't taxed in australia.
User #43637 8652 posts crazy horse Whirlpool Forums Addict reference: whrl.pl/RerhDJ posted 2015-Oct-30, 12:28 pm AEST ref: whrl.pl/RerhDJ posted 2015-Oct-30, 12:28 pm AESTdanhendo888 writes...
I've read on poker forums that in Australia, this income is not taxed. Accountants – do you have experience in this area and can you confirm this?
I assume you have read twoplustwo and the general consencus is no, it's not taxable, but you should still see an accountant and get a private ruling from the ATO.
User #177810 1157 posts addos Whirlpool Enthusiast reference: whrl.pl/RerhD0 posted 2015-Oct-30, 12:30 pm AEST ref: whrl.pl/RerhD0 posted 2015-Oct-30, 12:30 pm AESTthe only response here worth a pinch of salt is yogi's. ingore the others.
also, if you do find it to be regular and income-like remember the old 'hobby' income threshold of 20k
User #43637 8652 posts crazy horse Whirlpool Forums Addict reference: whrl.pl/RerhEo posted 2015-Oct-30, 12:32 pm AEST ref: whrl.pl/RerhEo posted 2015-Oct-30, 12:32 pm AESTaddos writes...
the only response here worth a pinch of salt is yogi's. ingore the others.
It is usually not the case and there is plenty of precedent for the winnings to not be taxed.
User #695937 3 posts micase I'm new here, please be nice reference: whrl.pl/RerhE2 posted 2015-Oct-30, 12:35 pm AEST ref: whrl.pl/RerhE2 posted 2015-Oct-30, 12:35 pm AESThttp://derwentandtamarchambers.com/2012/07/taxation-of-income-derived-from-gambling/
Have a read of that. Gambling income falls in a grey area, I haven't heard of the ATO going after someone recently for income from gambling but that isn't to say that it won't happen in the future.
User #23082 6589 posts JimmiC Whirlpool Forums Addict reference: whrl.pl/RerhFI posted 2015-Oct-30, 12:39 pm AEST ref: whrl.pl/RerhFI posted 2015-Oct-30, 12:39 pm AESTYogie B writes...
It depends on if you are a professional or not.
Even 'professional gamblers' aren't taxed on their gambling income as gambling is viewed as a hobby that is restricted by luck by the ATO not a profession.
User #506122 11820 posts Yogie B Whirlpool Forums Addict reference: whrl.pl/RerhGw posted 2015-Oct-30, 12:43 pm AEST ref: whrl.pl/RerhGw posted 2015-Oct-30, 12:43 pm AESTJimmiC writes...
Even 'professional gamblers' aren't taxed on their gambling income as gambling is viewed as a hobby by the ATO not a profession.
Not true, ask Joe Hachem. If you treat your hobby as a business, it's a business. Gambling is no exception.
User #43637 8652 posts crazy horse Whirlpool Forums Addict reference: whrl.pl/RerhGQ posted 2015-Oct-30, 12:44 pm AEST ref: whrl.pl/RerhGQ posted 2015-Oct-30, 12:44 pm AESTmicase writes...
I haven't heard of the ATO going after someone recently for income from gambling but that isn't to say that it won't happen in the future.
A few years ago they went after David Walsh (founder of MONA museum) and Zeljko Ranogajec who are the biggest punters in Australia, possibly the world.
I think from memory it was settled out of court.
User #506122 11820 posts Yogie B Whirlpool Forums Addict reference: whrl.pl/RerhHT posted 2015-Oct-30, 12:48 pm AEST ref: whrl.pl/RerhHT posted 2015-Oct-30, 12:48 pm AESTIt all comes down to is your poker playing a business.
User #177810 1157 posts addos Whirlpool Enthusiast reference: whrl.pl/RerhNm posted 2015-Oct-30, 1:13 pm AEST ref: whrl.pl/RerhNm posted 2015-Oct-30, 1:13 pm AESTYogie B writes...
It all comes down to is your poker playing a business.
+1
User #643885 1823 posts Trevor Reznik In the penalty box reference: whrl.pl/RerhNt posted 2015-Oct-30, 1:13 pm AEST ref: whrl.pl/RerhNt posted 2015-Oct-30, 1:13 pm AESTYogie B writes...
Not true, ask Joe Hachem. If you treat your hobby as a business, it's a business. Gambling is no exception.
Right, so don't treat it as a business. Treat it as a hobby you make all your money from. It is not taxable any more than winning tattslotto is taxable. It's just plain not taxable.
The only way to treat it as a business is to get an ABN and start pretending poker playing is a business and filing BAS statements and declaring income etc. But why would any sane person do this? It's not taxable unless you're silly enough to just really really want to pay tax on it.
User #232749 1128 posts 043110 Whirlpool Enthusiast reference: whrl.pl/RerhOJ posted 2015-Oct-30, 1:20 pm AEST edited 2015-Oct-30, 2:14 pm AEST ref: whrl.pl/RerhOJ posted 2015-Oct-30, 1:20 pm AEST (edited 2015-Oct-30, 2:14 pm AEST)JimmiC writes...
Even 'professional gamblers' aren't taxed on their gambling income as gambling is viewed as a hobby that is restricted by luck by the ATO not a profession.
Luck is not part of the test of whether you carry on a business. In fact, all business activities carry an element of risk, and luck. Having a few weeks of bad luck doesn't mean you cease to be carrying on a business, or never had a business in the first instance.
Like others have said, professional or not, if you carry out your gambling activities in a systematic business like way, then winnings are taxable.
And yes, like people have pointed out previously, it does happen occasionally, but is very much a factual question.
User #229504 303 posts Scandrew Forum Regular reference: whrl.pl/RerhQe posted 2015-Oct-30, 1:28 pm AEST ref: whrl.pl/RerhQe posted 2015-Oct-30, 1:28 pm AESTBased on technicalities it's actually considered taxable if it's considered your primary source of income or 'make a living out of it' i.e professional poker player.
Obviously, even those in the profession try to bend the rules as most do with everyday tax gray areas =P
With the the above said, illegal drug dealing income is technically taxable as well =P
User #43637 8652 posts crazy horse Whirlpool Forums Addict reference: whrl.pl/RerhYk posted 2015-Oct-30, 1:55 pm AEST ref: whrl.pl/RerhYk posted 2015-Oct-30, 1:55 pm AESTHere is an example of an ATO Private Ruling given to a poker player: https://www.ato.gov.au/rba/content/?ffi=/misc/rba/content/91541.htm
User #232749 1128 posts 043110 Whirlpool Enthusiast reference: whrl.pl/Rerh17 posted 2015-Oct-30, 2:12 pm AEST ref: whrl.pl/Rerh17 posted 2015-Oct-30, 2:12 pm AESTcrazy horse writes...
https://www.ato.gov.au/rba/content/?ffi=/misc/rba/content/91541.htm
This.
Thanks crazy horse.
User #643885 1823 posts Trevor Reznik In the penalty box reference: whrl.pl/Rerh3O posted 2015-Oct-30, 2:20 pm AEST ref: whrl.pl/Rerh3O posted 2015-Oct-30, 2:20 pm AESTcrazy horse writes...
Here is an example of an ATO Private Ruling given to a poker player: https://www.ato.gov.au/rba/content/?ffi=/misc/rba/content/91541.htm
Exactly. There's a very good reason for this too. A losing gambling-addict who happened to run a successful brick laying business could easily decide that is brick-laying business is now a 'bricklaying and poker' business and suddenly all of his excessive gambling losses are now business losses, reducing or even zeroing out his tax bill. The ATO aren't as stupid as people think.
User #643033 754 posts danhendo888 Whirlpool Enthusiast reference: whrl.pl/Rerh4K posted 2015-Oct-30, 2:25 pm AEST ref: whrl.pl/Rerh4K posted 2015-Oct-30, 2:25 pm AEST O.P.crazy horse writes...
Here is an example of an ATO Private Ruling given to a poker player: https://www.ato.gov.au/rba/content/?ffi=/misc/rba/content/91541.htm
Okay, thanks for that. Essentially, poker income is not taxed as long as derived as per below (which is exactly what I'd be doing): - You commenced playing a gaming activity on a social basis.
- In 2008, you ceased your employment and commenced playing that gaming activity as your sole source of income.
- You partake in online 'cash games' and participate in tournaments.
- You continue to participate in weekly social games for no consideration.
- You derive an overall net profit from your gambling activities as the income from the cash games exceed the losses sustained from the tournaments.
- During a six month period in the 2009 income year you earned over ,000 (USD) from online cash games and over ,000 in 'rakebacks' / bonuses.
- You use computer software to analyse your own game. You advised that this software has no effect on the element of chance and does not give you a special advantage over your fellow players.
- You keep track of your wins and losses.
- You receive monthly reports regarding your earnings derived from rakebacks and bonuses.
- You do not maintain a home office. You do not employ staff or maintain a website.
- You do not derive any income from associated industry activities.
User #506122 11820 posts Yogie B Whirlpool Forums Addict reference: whrl.pl/Rerh4V posted 2015-Oct-30, 2:25 pm AEST ref: whrl.pl/Rerh4V posted 2015-Oct-30, 2:25 pm AESTJust remember a private ruling is exactly that, private. It does not apply to you in any way. You can use it as an example to get one yourself, but other than that it isn't much good to you.
User #643885 1823 posts Trevor Reznik In the penalty box reference: whrl.pl/Reriln posted 2015-Oct-30, 3:47 pm AEST ref: whrl.pl/Reriln posted 2015-Oct-30, 3:47 pm AESTYogie B writes...
Just remember a private ruling is exactly that, private. It does not apply to you in any way. You can use it as an example to get one yourself, but other than that it isn't much good to you.
It's a precedent that clearly shows playing poker as a means of income is not taxable in the eyes of the ATO, contrary to your advice ITT. And you're right, he should get himself one, and the ATO will hit copy-paste.
User #506122 11820 posts Yogie B Whirlpool Forums Addict reference: whrl.pl/RerimL posted 2015-Oct-30, 3:54 pm AEST ref: whrl.pl/RerimL posted 2015-Oct-30, 3:54 pm AESTTrevor Reznik writes...
It's a precedent that clearly shows playing poker as a means of income is not taxable in the eyes of the ATO
Until it is. Plenty of professional Australian poker players get taxed. Everyone's circumstances are different. If you are a professional poker player, get a tax ruling.
User #43637 8652 posts crazy horse Whirlpool Forums Addict reference: whrl.pl/ReriAF posted 2015-Oct-30, 5:11 pm AEST ref: whrl.pl/ReriAF posted 2015-Oct-30, 5:11 pm AESTYogie B writes...
Plenty of professional Australian poker players get taxed.
Which ones?
User #643885 1823 posts Trevor Reznik In the penalty box reference: whrl.pl/ReriLW posted 2015-Oct-30, 6:27 pm AEST ref: whrl.pl/ReriLW posted 2015-Oct-30, 6:27 pm AESTcrazy horse writes...
Which ones?
The dumb ones who declare it as income. The ATO will tax ANYONE who just declares income, they're not going to tell you no don't do that.
User #306382 4479 posts EteLXX Whirlpool Forums Addict reference: whrl.pl/ReriQG posted 2015-Oct-30, 6:59 pm AEST ref: whrl.pl/ReriQG posted 2015-Oct-30, 6:59 pm AESTGambling wins are not income just as gambling losses are not deductions UNLESS you fall into the rare category of a someone carrying on a business of gambling (i.e. a professional gambler).
The ATO is reluctant to accept that any particular person is carrying on a business of gambling because the ATO well knows that on average people lose more than they make gambling. So allowing gambling wins as income and gambling losses as deductions is going to end up in a net revenue loss to the ATO.
That doesn't mean that in specific cases someone's gambling activities might be extensive enough, involve enough time and money and have the characteristics of a business such that the ATO would accept that they are carrying on a business of gambling but that person would be wise to get a private ruling from the ATO.
PS: as someone else pointed out there was a case in the last couple of years where the ATO went after a syndicate of professional gamblers who were gambling large sums on the Hong Kong racetrack using a very sophisticated computer model. The ATO alleged they were carrying on a business of gambling. That case settled.
User #306382 4479 posts EteLXX Whirlpool Forums Addict reference: whrl.pl/ReriQO posted 2015-Oct-30, 7:00 pm AEST ref: whrl.pl/ReriQO posted 2015-Oct-30, 7:00 pm AESTTrevor Reznik writes...
The ATO will tax ANYONE who just declares income, they're not going to tell you no don't do that.
Australia's tax system works on self-assessment. That means that prima facie the ATO will accept what you put in your return as true. It's only if they take a look at your return that they might query whether your gambling gains are income.
User #232749 1128 posts 043110 Whirlpool Enthusiast reference: whrl.pl/ReriR2 posted 2015-Oct-30, 7:09 pm AEST ref: whrl.pl/ReriR2 posted 2015-Oct-30, 7:09 pm AEST
EteLXX writes...
It's only if they take a look at your return that they might query whether your gambling gains are income.
They won't unless it is a net loss which is offsetting against other business revenue, like Trevor Reznik correctly pointed out.
User #43637 8652 posts crazy horse Whirlpool Forums Addict reference: whrl.pl/ReriVi posted 2015-Oct-30, 7:16 pm AEST ref: whrl.pl/ReriVi posted 2015-Oct-30, 7:16 pm AESTTrevor Reznik writes...
The dumb ones who declare it as income.
Haha, hadn't considered that possibility.
From this ruling: https://www.ato.gov.au/law/view/document?locid=%27FOI/1012874PPP
7. Ultimately each case will depend on its own facts. There is no Australian case in which the winnings of a mere punter have been held to be assessable (or the losses deductible). As Hill J stated in Babka, although mere punting may constitute a business, 'the intrusion of chance into the activity as a predominant ingredient' will generally preclude such a finding. If a taxpayer is involved in other business activities in the racing industry, it will be more likely that betting activities are of a business nature.
User #306382 4479 posts EteLXX Whirlpool Forums Addict reference: whrl.pl/ReriXF posted 2015-Oct-30, 7:29 pm AEST ref: whrl.pl/ReriXF posted 2015-Oct-30, 7:29 pm AEST043110 writes...
They won't unless it is a net loss which is offsetting against other business revenue, like Trevor Reznik correctly pointed out.
Its true that as a practical matter what's much more likely to attract the ATO's attention are gambling losses being claimed as deductions than taxpayers returning income. But as a matter of principle and correct application of the law an ATO audit should exclude gambling wins from income.
I've seen cases where ATO audits have resulted in a reduction in the tax payable because taxpayers made errors in their returns which resulted in them paying more tax than they should have.
User #7910 13913 posts The Ziggster Section Moderator reference: whrl.pl/ReriX3 posted 2015-Oct-30, 7:31 pm AEST ref: whrl.pl/ReriX3 posted 2015-Oct-30, 7:31 pm AESTThe only people who get taxed are the guaranteed winners (the casinos themselves)
And perhaps those Tasmanian mathematicians who as I understand it weren't often gambling, rather arbitraging – eg. Buying every possible ticket combination for a lotto draw
User #306382 4479 posts EteLXX Whirlpool Forums Addict reference: whrl.pl/Reri0f posted 2015-Oct-30, 7:44 pm AEST ref: whrl.pl/Reri0f posted 2015-Oct-30, 7:44 pm AESTThe Ziggster writes...
And perhaps those Tasmanian mathematicians who as I understand it weren't often gambling, rather arbitraging – eg. Buying every possible ticket combination for a lotto draw
IIRC they collected an enormous amount of data on the pool of horses that ran at the HK racetrack and then used a very sophisticated computer model to identify circumstances where they thought a particular horse's odds were underpriced by the bookies.
So there was an element of chance in each individual bet but overall they were beating the bookies via a business system because they had access to information that other punters and the bookies did not.
Do Gambling Winnings Get Taxed
There was a long article about the system in the Australian or Fin Review a while ago.
User #43637 8652 posts crazy horse Whirlpool Forums Addict reference: whrl.pl/Reri1A posted 2015-Oct-30, 7:52 pm AEST ref: whrl.pl/Reri1A posted 2015-Oct-30, 7:52 pm AESTWell they have hundreds of employees and contractors to get data for them. They bet all over the world and turn over in excess of billion a year. Even they argued they were not in a business, just a bunch of blokes who loved a punt.
The fact it ended in an undisclosed settlement means that it doesn't set any precedent.
User #5220 47244 posts Brian White Whirlpool Forums Addict reference: whrl.pl/Rerjca posted 2015-Oct-30, 9:06 pm AEST ref: whrl.pl/Rerjca posted 2015-Oct-30, 9:06 pm AESTcleary89 writes...
100% no. gambling winnings aren't taxed in australia.
They are if it is deemed to be your main source of income.
User #5220 47244 posts Brian White Whirlpool Forums Addict reference: whrl.pl/Rerjci posted 2015-Oct-30, 9:07 pm AEST ref: whrl.pl/Rerjci posted 2015-Oct-30, 9:07 pm AESTJimmiC writes...
Even 'professional gamblers' aren't taxed on their gambling income as gambling is viewed as a hobby that is restricted by luck by the ATO not a profession.
http://www.dailytelegraph.com.au/australian-tax-office-pursues-millionaire-professional-gambler-david-walsh/story-e6freuy9-1226387003384
User #5220 47244 posts Brian White Whirlpool Forums Addict reference: whrl.pl/Rerjcr posted 2015-Oct-30, 9:09 pm AEST ref: whrl.pl/Rerjcr posted 2015-Oct-30, 9:09 pm AESTcrazy horse writes...
Which ones?
http://www.dailytelegraph.com.au/australian-tax-office-pursues-millionaire-professional-gambler-david-walsh/story-e6freuy9-1226387003384
User #643885 1823 posts Trevor Reznik In the penalty box reference: whrl.pl/Rerjd0 posted 2015-Oct-30, 9:22 pm AEST ref: whrl.pl/Rerjd0 posted 2015-Oct-30, 9:22 pm AESTBrian, that is an absolute joke, 'He owns a controversial modern art gallery in Tasmania and art worth 5 million, homes in several states, a winery called Moorilla Estate and a micro-brewery called Moo Brew.'
That is not a poker player, poker players fight for the scraps, sit with degenerates to scrape an 'easy' living. 5million of art? You don't get that playing poker, you wouldn't even think of buying it if you were busting your leather arse 24/7 to make a living at poker. You get that kind of money being some kind of once in a lifetime international mafia drug lord.
That's why the ATO are interested, he's not making the money gambling, he's making it tho, doing something else.
User #5220 47244 posts Brian White Whirlpool Forums Addict reference: whrl.pl/RerjKg posted 2015-Oct-31, 6:53 am AEST edited 2015-Oct-31, 6:58 am AEST ref: whrl.pl/RerjKg posted 2015-Oct-31, 6:53 am AEST (edited 2015-Oct-31, 6:58 am AEST)Trevor Reznik writes...
Brian, that is an absolute joke, 'He owns a controversial modern art gallery in Tasmania and art worth 5 million, homes in several states, a winery called Moorilla Estate and a micro-brewery called Moo Brew.'
Do you know him personally, how do you know he did not make money to own those through Poker ?, Ultimately, that is between him and the ATO and for the ATO to decide if he liable to pay TAX on his winnings.
But people are right, generally 'Winnings' are not taxed, unless it is deemed to be of substantial income, which the ATO has previously done to people who entered poker tournaments here and overseas.
Maybe (and a guess) he is funnelling winnings through those businesses, and hence the ATO is investigating.
User #643885 1823 posts Trevor Reznik In the penalty box reference: whrl.pl/RerjNe posted 2015-Oct-31, 7:30 am AEST ref: whrl.pl/RerjNe posted 2015-Oct-31, 7:30 am AESTBrian White writes...
Do you know him personally, how do you know he did not make money to own those through Poker ?, Ultimately, that is between him and the ATO and for the ATO to decide if he liable to pay TAX on his winnings.
If he's got a 5million art collection from playing poker he is the greatest poker player to have ever lived, move over Doyle Brunson.
But people are right, generally 'Winnings' are not taxed, unless it is deemed to be of substantial income, which the ATO has previously done to people who entered poker tournaments here and overseas.
Maybe (and a guess) he is funnelling winnings through those businesses, and hence the ATO is investigating.
He's funnelling drug money through gambling sites so he can then declare it as 'winnings' in order to legitimise the money IMO. It's the oldest trick in the book.
User #43637 8652 posts crazy horse Whirlpool Forums Addict reference: whrl.pl/RerjOn posted 2015-Oct-31, 7:45 am AEST ref: whrl.pl/RerjOn posted 2015-Oct-31, 7:45 am AESTThey definitely aren't poker players. They bet on horses, mainly They employ 300 people to collect and analyze data. They turn over in excess of billion a year, probably more these days.
These guys aren't drug dealers, they are very sophisticated mathematician's.
User #43637 8652 posts crazy horse Whirlpool Forums Addict reference: whrl.pl/RerjOF posted 2015-Oct-31, 7:47 am AEST ref: whrl.pl/RerjOF posted 2015-Oct-31, 7:47 am AESTBrian White writes...
But people are right, generally 'Winnings' are not taxed, unless it is deemed to be of substantial income, which the ATO has previously done to people who entered poker tournaments here and overseas.
This simply is not true. Please see the extract from the ATO ruling I posted above: /forum-replies.cfm?t=2465234&p=2&#r30
No mere punter has been found to be running a business for tax purposes.
User #26895 22758 posts michael j Whirlpool Forums Addict reference: whrl.pl/Rerkrx posted 2015-Oct-31, 12:25 pm AEST ref: whrl.pl/Rerkrx posted 2015-Oct-31, 12:25 pm AESTcleary89 writes...
100% no. gambling winnings aren't taxed in australia.
Incorrect, not 100%.
See posts above.
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IRS Clarifies Poker Tournament Tax Rules
Mexico
Well, it is SOUTH of America! It’s also a huge draw for US-based poker players who have been struggling ever since Black Friday shut down most of their livelihood, forcing players to relocate. Mexico, just across the border, was a big draw.
Recently there have been plans to legislate and regulate the online industry which has resided in a very grey area for years. This, naturally, would lead to taxation, and possibly segregated player pools – and would be an absolute nightmare for the pros currently based there.
Still, it may be a ways off yet so let’s look at the here and now. For US citizens you have to pay U.S. income tax on part or all of the money you make, regardless of where you make it. Fortunately the IRS lets you offset your U.S. income tax with tax you pay abroad.
Below - Angel Guillen is famous Mexican poker pro
As with the United States, Mexico has an income tax system based on income brackets. Incomes up to about ,000, are taxed at rates of 30% or less. Incomes over three million pesos -- about 0,769 -- are taxed at 35%. In addition, Mexico allows itemized deductions, although they are capped at 10% of your income.
According to Angloinfo.com “The tax system in Mexico is complex and bureaucratic. It is advisable for anyone liable for income tax (ISR) in Mexico to engage the services of an accountant.”
They add that “When money is imported from overseas the Mexican tax authorities may ask for proof that tax has been paid on that money. Note that for income earned overseas, there are several tax treaties that may be applicable to avoid double taxation. For non-residents, only income obtained in Mexico is subject to taxation.”
Below - The Mexican Avenue of the Dead, seen from the Moon Pyramid
So, it’s a mixed bag really for poker players looking to make Mexico their base, particularly if the proposed legislation goes through at some point. It could end up with many more live venues and restricted online availability.
In any event, the complete governmental tax laws are available on their official site here for those considering the move.
We hope you’ve enjoyed our ultimate poker taxes guide!
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