| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012602465981
Ruling
Subject: Assessability of premium bonds
Question 1
Are the proceeds from your overseas lottery assessable in Australia?
Answer
Yes.
This ruling applies for the following periods
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
Year ended 30 June 2015
Year ended 30 June 2016
Year ended 30 June 2017
The scheme commences on
1 July 2009
Relevant facts and circumstances
You are a resident of Australia for taxation purposes.
You own overseas bonds.
The proceeds of the overseas bonds are not taxable overseas.
There are monthly lottery draws.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 26AJ
Income Tax Assessment Act 1936 subsection 6(1)
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 6-10
Reasons for decision
Section 6-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that a taxpayer's assessable income includes statutory income amounts that are not ordinary income but are included in assessable income by another provision. As you are an Australian resident, your assessable income includes your statutory income from all sources, whether in or out of Australia.
Section 10-5 of the ITAA 1997 lists provisions about assessable income.
Included in the list is section 26AJ of the Income Tax Assessment Act 1936 (ITAA 1936) which deals with investment-related lottery winnings, included cash prizes.
The effect of subsection 26AJ(1) of the ITAA 1936 is that where an amount is paid to a taxpayer and:
• the payment is by way of winnings from betting, lottery or another form of gambling or game with prizes;
• the chance to participate in, for example the lottery, was provided wholly or partly in respect of an investment held by the taxpayer in or with an investment body; and
• the lottery or game was organised by the investment body,
then the amount received by the taxpayer is included in their assessable income.
In the case of Premium Bonds from the Country A, if you win a prize, the winnings received will meet the requirements of subsection 26AJ(1) of the ITAA 1936.
The amounts you receive from the lottery is therefore statutory income and must be included in your assessable income in your Australian tax return under section 6-10 of the ITAA 1997.
Please note:
Taxation Ruling TR 2006/11 Private Rulings explain that the Commissioner limits the life of a private ruling because of the possibility that laws may change or a subsequently issued public ruling may override a private ruling the Commissioner issues to you. In these circumstances a ruling that had been issued to you would no longer apply and could no longer be relied upon.
Therefore, the Commissioner will only rule for the current financial year plus three future financial years.