Edited version of private advice

Authorisation Number: 1052044055267

Date of advice: 12 October 2022

Ruling

Subject: Business of gambling

Question

Do your personal gambling activities constitute a business which requires the net gambling proceeds to be returned as assessable income (or deductible loss)?

Answer

No.

Section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) defines 'business' as 'including any profession, trade, employment, vocation or calling, but not occupation as an employee'.

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 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.

This ruling applies for the following period:

Year ended 30 June 2022

The scheme commences on:

1 July 2021

Relevant facts and circumstances

Income Tax Assessment Act 1997 section 995-1

Relevant legislative provisions

During the 2021-22 income year, you engaged in the following gambling activities as a hobby:

•                    betting on horse racing, greyhound racing and US sports

•                    playing various casino games of chance

•                    competing in poker games in pubs, clubs and casinos in Sydney.

The gambling was conducted over a period of between 6-9 months and involved uncertainty in the outcomes.

As part of your horse and greyhound racing, you used multiple bookmaking and gambling services in person and online.

You have no professional experience with greyhound racing, horse racing or casino games, nor did you have a systematic method for managing risk and chance when you undertook your gambling activity.

You hold a fulltime job and do not rely on gambling winnings to fund your lifestyle.

You did not specifically schedule time to undertake your gambling activity and merely did so during periods of free time on an ad hoc basis.

Paid subscriptions were obtained to various services which provided recommended sports tips, for which you paid a subscription fee in exchange. These services are all freely available to the public.

You did not hire an office, engage staff or acquire any specialist services to conduct the activity.

External finance was not used to fund the activity, in addition, bets and winnings were paid into a personal bank account.

You advised that whilst you may gamble in the hope of making a profit, that this is not a deciding factor in why you gamble, especially considering your gambling results vary significantly between gains to losses.

Detailed records were not kept of your activities; however, you estimate to have significant winnings during the 2021-22 income year.

You note that the cumulative winnings received over the course of the 2021-22 income year were a result of chance and luck, rather than a detailed and systematic approach to your activity.