Edited version of private advice

Authorisation Number: 1052057377807

Date of advice: 1 December 2022

Ruling

Subject: Assessable income and deductions - gambling activities

Question 1

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, 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. Particular weight is given to the fact that the betting results in this case depend on chance rather than on skill and judgment. This is consistent with the principles set out in Taxation Ruling IT 2655 Income tax: betting and gambling - whether taxpayer carrying on business of betting or gambling (IT 2655)

Therefore, the winnings received in relation to this activity will not be assessable under section 6-5 of the ITAA 1997.

Question 2

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 and the winnings are not assessable income, the expenses/losses related to the activity will not be deductible under section 8-1 of the ITAA 1997.

This private ruling applies for the following periods:

Year ended 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You undertake betting and gambling activities.

You live at home with your parents and do not have any dependants.

You are currently studying at university.

You are a sports and gambling enthusiast and have a passion for gambling.

In relation to your betting and gambling activities you do not have a management or executive authority, employ any person, lease or utilise any space or have a business plan or budget.

Your activities primarily comprise of betting and gambling activities but you also compile and compare gambling and sporting data on an ad hoc basis.

You undertake the activities principally for pleasure and recreational purposes.

You do not have access to any insider sources of information and all information used by you is available to the general public.

You use software, tools and data available to the general public.

You use a paid subscription service that provides a comparison of odds across Australian bookmakers. You use this service to collate and compare odds and not to determine what bets are placed.

All bets placed are at your absolute discretion and based on your personal judgement, experience and intuition.

You do not use computer programs to place bets or rely on the computer programs to automate the betting process.

You are not part of any formal gambling group or syndicate.

You do not have any external financing or credit facilities.

You do not have a business plan, budget, accounting records or security arrangements.

You are supported by your parents and do not solely rely on winnings to meet your day-to-day expenses.

You initially funded the activities from personal savings and your financial resources have grown organically.

You do not use accounting software to keep records of your wins and losses.

You primarily bet on horse racing as well as greyhounds and other racing, soccer and Australian rules football. You may expand into other sports, such as e-sports in the future.

You have never undertaken training in relation to betting or gambling or collecting/analysing gambling and sporting data.

You are not involved in any profession undertaking relation to any of the sports on which bets are placed.

Your activities are not undertaken in association with any other related business activities, such as horse breeding or training.

You do not have any specialist skill, knowledge or training in any of the sports you place bets on.

You wager between $XX and $XX per bet.

You spend on average approximately XX-XX hours per week on the activities.

Your winnings or losses are entirely dependent on chance rather than skill.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 8-1