Edited version of private advice

Authorisation Number: 1052202969499

Date of advice: 15 December 2023

Ruling

Subject: Assessable income - betting and gambling

Question

Are the losses you incur from your betting and gambling activities deductible under section 8-5 of the Income Tax Assessment Act 1997 (ITAA 1997), and conversely are any proceeds received from these activities assessable under 6-5 of the ITAA 1997?

Answer

No.

Considering the relevant facts against the principles outlined in Taxation Ruling IT 2655 Income tax: betting and gambling - whether taxpayer carrying on business of betting or gambling (IT 2655), it is the Commissioner's view that you are not carrying on a business of betting or gambling and your activity is considered a hobby.

The factors or indicators that give the overall impression that your activity is a hobby and that you are not carrying on a business of betting or gambling is as follows:

•         You do not have a business plan, employ any staff, or lease any premises

•         You do not maintain records of your betting and gambling transactions

•         You do not conduct your betting and gambling activities with the intent of profit

•         Your betting and gambling activities are not systematic or organised in a business-like manner

•         Your activity is not associated with any other related business activity such as horse breeding or training.

•         You utilise a degree of skill and judgment in determining betting opportunities when you manually analyse the database. This does not negate the fact that the outcome is dependent on chance. You have no automatic or guaranteed return from the betting activities by analysing the historical data.

Consequently, your losses are not deductible under section 8-1 of ITAA 1997 and your proceeds from these activities are not considered assessable under 6-5 of ITAA 1997.

This ruling applies for the following periods:

Period Ended 30 June 20XX to Period Ended 30 June 20XX

The scheme commenced on:

1 July 20XX

Relevant facts and circumstances

Background

You have a degree in XXXX.

You were a full-time student, and full-time carer for a relative. You are currently unemployed.

You rely on savings to meet everyday expenses and are currently seeking employment to meet everyday expenses in future.

You have no dependants.

You undertake betting and gambling activities for pleasure and recreational purposes and not with the intent of making a profit.

You funded your betting and gambling activities from personal savings. You have not sought any external finance or lines of credit to fund your activities.

You have not undertaken any training in relation to betting or gambling or collecting/analysing gambling and sporting data.

You advised that you consider yourself to be a sport and gambling enthusiast and consider your passion for gambling a hobby/recreational activity.

You do not:

§  Have a management or executive authority

§  Employ any person

§  Have any service providers for software, operational resources or otherwise; or

§  Lease or utilise any space

You do not have a business plan or budget for your individual betting and gambling activities.

Your activity is not associated with any other related business activity such as horse breeding or training.

You are not engaged full-time in the activity.

You undertake the betting and gambling activities for pleasure and recreational purposes and not with the intent of making a profit.

You do not keep accounting records of your wins or losses. You have access to records of your bets placed through bookmakers, betting outlets and agents, or the betting applications.

Group Database

You, Person B and Person C formed a friendship group that undertakes gambling research and compiles sporting and gambling data (the database).

You live alone in a separate city to Person B and Person C.

You have no written agreement between yourself, Person B or Person C.

The database is held on Google Sheets, Google documents and Microsoft excel to store and access data.

The database is a compilation of publicly available data and statistics of historical data from various events.

The database maintained is only for sports that you have a specific interest in and place bets on.

The collection and analysis of the data is conducted on an ad hoc basis.

Collectively you spend a specified approximate hours per week on gambling and betting activities.

Limited administration of the database is undertaken. Everyone would contribute to any administration required on an ad hoc basis.

All updates to the database are voluntary, and all friends within the group have access to the database.

The database is used as a tool for analysing betting opportunities.

No individual in the group has any legal right or expectation to any win or losses from the bets placed by another individual

You spend time with Person B and Person C discussing and comparing bets and highlights of your gambling activities. You provided examples of this.

No individual in the group has the authority to place a bet or gamble on behalf of the group or another individual. Bets are placed by everyone, in their own individual betting account.

The final decision on a particular bet is by the individual's sole discretion and on 'gut instinct'.

You do not share financial resources, proceeds or losses with any friend in the group.

Individual Betting Activities

You provided us with details on the average of hours per week you spend on your betting and gambling activities. You are not engaged full-time in the activity.

You do not have any specialist skills or training in poker or any other card games.

Your bets are generally wagers against a bookmakers fixed price line (eg. place or win bet).

You place multi bets, which involve greater risks, which increases as the number of legs increase. You specified an approximate percentage of your gambling activities that would be placed as a multi bet.

You have no influence or control over the results of the sporting event that you place a bet on.

You play poker more regularly during a specific sport off-season. You provided the average number of days per week you would play.

Any winnings from your bets placed are paid into your personal bank account or settled in cryptocurrency or cash.

You provided the details on where and how you place your bets.

You provided details on what sporting competitions and events you place bets on.

You may expand your gambling activities to other sports in future.

You occasionally utilise bookmaker promotions such as where a bookmaker:

•         Pay $X for every $1 on a successful two-leg multi bet

•         Returns a portion of a bet made as a credit to your sportsbook account where the bet is unsuccessful. This credit cannot be withdrawn for cash and must be applied to a subsequent bet.

You do not use computer programs to place bets or assist in undertaking any gambling activities.

You do not rely on computer programs to automate the betting process or identify profitable bets.

The number of bets made varies and you do not closely track the value of bets placed. Accurate profit/loss figures cannot be provided as there is no record-keeping. You provided an estimate value range of bets you placed during a specific sports season.

Your bets are placed using a combination of the analysis of the groups internal database, your personal experience and intuition.

You do not keep accounting records, security arrangements or agreements.

Bets are usually placed in advance of the sporting event. There is limited 'live' betting.

You occasionally play poker by yourself, or with Person B.

You watch poker content in the form of games and tutorials

You are never in a 'no loss' position and you are never guaranteed income or to win a betting outcome.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 8-1

Income Tax Assessment Act 1997 section 995-1