Professional Gambler Winnings Are Tax Free

Australians are the most prolific gamblers in the world and lose over $24 billion per year gambling. Australia’s gambling losses of $1,200 per adult per year are 50% higher than second placed Singapore, and double those in the United States.

Of course, a few gamblers do win, and one of those is Jonathan Karamalikis. Starting with just $3 in 2007, Jonathan has raked in $4.2 million from online poker since 2007 and a further $2.1 million from live tournaments.

Jonathan is just one of thousands of Australians who make their fulltime living from gambling on horse racing, online poker, sports betting, casinos, etc. Apart from making money doing something they enjoy; professional gamblers are also lucky as their winnings are generally tax free in Australia.

Taxation ruling IT 2655 Income tax: betting and gambling – whether taxpayer carrying on business of betting or gambling states that ‘proceeds from gambling do not usually form part of a person’s assessable income for tax purposes, unless the person is a professional gambler and/or their gambling activities are a business or part of a business’. To meet the ATO definition of ‘professional gambler’ there needs to be a business connection with the industry. For example, in horse racing, punters would need to have a business connection with the racing industry (such as a trainer or breeder of horses), before they are required to pay tax.