Edited version of private advice

Authorisation Number: 1051913779844

Date of advice: 23 October 2021

Ruling

Subject: Business of gambling

Question 1

Are you considered to be carrying on a business of betting or gambling?

Answer

No.

Taking in consideration the factors of your case, it is the Commissioner's view that you are not carrying on a business of betting or gambling, in relation to your various betting activities. In this regard, particular weight is given to the fact that the betting results in this case depend on chance rather than on skill and judgment. Consistent with the principle in Taxation Ruling IT 2655 Income tax: betting and gambling - whether taxpayer carrying on business of betting or gambling (IT 2655) that 'the intrusion of chance into the activity as a predominant ingredient' will generally preclude a finding that the gambling activities constitute a business, it is the Commissioner's view in this case that the predominant element of chance in your activities point away from the existence of a gambling or betting business.

Question 2

Are your winnings from your gambling activities assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) for income tax purposes?

Answer

No.

As you are not carrying on a business of betting or gambling, the winnings received in relation to this activity will not be assessable under section 6-5 of the ITAA 1997.

Question 3

Are your deposits/expenses incurred in relation to the gambling activities deductible under section 8-1 of the ITAA 1997?

Answer

No.

As you are not carrying on a business of betting or gambling, the expenses/losses related to the activity will not be deductible under section 8-1 of the ITAA 1997.

Future years

You should note that conducting an activity that has been described as a hobby is a 'status'. You can change from conducting an activity as a hobby to that of being in business and vice-versa over time as your level of activity changes. Therefore, you should evaluate your level of activity on a regular basis to see whether you are still conducting a hobby or carrying on a business for future years.

This ruling applies for the following periods:

Year ended 30 June XXXX

Year ended 30 June XXXX

Year ended 30 June XXXX

Year ended 30 June XXXX

The scheme commences on:

1 July XXXX

Relevant facts and circumstances

There are X members of a friendship group (Group) who undertake gambling research and compile sporting and gambling data.

They all are sporting and gambling enthusiasts, with a passion for gambling and consider their betting activities as more of a recreational pursuit or hobby. They obtain enjoyment and excitement from undertaking betting and socialise within the betting community.

There is no formal written agreement between members of the group, nor is there any management or employment of staff, service providers or leasing of any sort to provide areas to undertake the betting activities. The members do not sell betting advice or lay odd for other bets.

There is no business plan, budget or commercial operations for the group's gambling activities. Limited administration is undertaken when required and is done on an ad-hoc basis by any of the group members. When a group decision is required, it is made by consensus of the all-group members.

Each member spends between 10 - 30 hrs per week on ad-hoc gambling activities, including placement of bets, card games, betting research and analysis of betting data.

Bets are made in advance through licenced betting agencies, group members, casinos, other individuals, and foreign betting agents. Betting is also undertaken through poker and other card games, including online and in person poker tournaments. The group members play individually, together, and some members do no part in any card betting activities.

The members also undertake betting on the various sports.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 8-1