Edited version of private advice

Authorisation Number: 1052223003067

Date of advice: 20 February 2024

Ruling

Subject: Am I in business - gambling

Question 1

Is income received from your betting and gambling activities assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

No, in accordance with the principles outlined in Taxation Ruling IT 2655 Income tax: betting and gambling - whether taxpayer carrying on business of betting or gambling it is accepted you are not carrying on a business of betting or gambling and any income or winnings received from these activities are not assessable under section 6-5 of the ITAA 1997.

Question 2

Are expenses associated with your betting and gambling activities deductible under section 8-1 of the ITAA 1997?

Answer

No, in accordance with the principles outlined in Taxation Ruling IT 2655 Income tax: betting and gambling - whether taxpayer carrying on business of betting or gambling it is accepted you are not carrying on a business of betting or gambling and any expenses or losses from these activities are not deductible under section 8-1 of the ITAA 1997.

This ruling applies for the following periods:

Year ended 30 June 2023

Year ending 30 June 2024

The scheme commenced on:

1 July 2022

Relevant facts and circumstances

You are a sports and gambling enthusiast and consider your gambling activity a hobby or recreational activity.

Your passion for gambling began at an early age but you have had no training in any of the events you are betting on.

You were previously employed on a casual basis but are now unemployed.

You are also developing another income generating scheme and have spent significant time on research and development for this scheme. You also spend time on other pursuits such as investing in cryptocurrency.

You intend to cease your gambling activities in the next 6 to 12 months and focus on other activities such as the income generating scheme you are developing.

You are motivated by the enjoyment of the event, and the excitement and amusement of the activity, and have no business plan.

You initially funded your gambling activity from your personal savings.

While your financial resources have grown organically from that time, they vary depending on the success of your gambling activity.

You do not fund your gambling activity through credit.

You place bets using your betting accounts and also the betting accounts of friends, friends of friends, and acquaintances or affiliates.

You place bets through other people's accounts as your accounts are often closed or limited by bookmakers or sportsbook providers.

You estimate between 95 and 99% of your bets are placed in Australian markets and you have rarely placed bets on foreign markets in recent years.

When betting through the accounts of others you deposit money into their accounts so the bet can be placed, and no funds of the other party are used. The other parties to these transactions give the bank or betting agency an authority for you to use their accounts for your gambling activity. The other parties also agree to provide you with information including email addresses, identification details, and betting history for these purposes.

You make these arrangements with other parties solely on a trust basis and have lost money when other parties have kept your money and broken off contact with you.

You make ad-hoc payments to these other people from time to time for the use of their accounts.

You do not place bets on behalf of other parties.

The majority of your bets are placed online using a laptop, personal computer, or mobile phone either through your or other parties' accounts.

You keep prepaid SIMS to place bets through other parties' accounts.

You place your bets from your home, and do not rent any dedicated office space for this activity.

Your bets are typically made in advance of the relevant event.

Your bets are simple bets made against professional bookmaker's fixed price offerings, for example for a "win", "place", or "quinella".

You also take advantage of bookmaker promotions such as those that pay returns on combinations of multiple outcomes or return portions of your stake as a non-refundable credit to your account.

While the majority of the bets you place are valued at less than $50 the aggregate value of bets you place for each event is often more than several thousand dollars.

The value of the bets you place varies significantly from time to time.

Your bets are placed based on your personal judgement, experience, and intuition.

You do not use software to automate or place your bets.

You use a paid subscription service from time to time to collate and compare odds across Australian bookmakers.

Your subscription with this paid service includes access to a downloadable tool which compares bookmaker odds, and provides race lists, countdown timers for races and notifications of promotions.

You use this tool to inform and guide your betting activity.

Expenses associated with your gambling activity include your annual subscription fee for this subscription service, the cost of the SIMS and phones attached to betting accounts, and fees associated with opening and maintaining bank accounts.

You do not have any influence or control over the results of the events you are betting on, and believe the outcomes are due to chance.

You do not have access to insider information and all the information you use is available to the general public.

You are exposed to some element of risk in all your betting activity and are not guaranteed positive outcomes.

You do not take any steps to mitigate this risk.

Your gambling activity is not undertaken in association with any other activity related to the events you are betting.

You are not a member of any professional association or operating as part of a syndicate.

You have no financial interest in any entities associated with the events you are betting on.

Your winnings are usually paid into the bank account associated with the account associated with the agency through which you placed the bet. Money is then transferred to your personal bank account as required.

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

You sometimes collate your wins and losses using excel spreadsheets out of interest in your overall success and the outcomes of your activities.

These spreadsheets show your balances and allow you to compare your position from month to month.

You compile the names of other parties you involve in your betting activity in another spreadsheet.

You keep no other records of your gambling activity.

Your winnings are typically paid into a bank account in cash.

You spend, on average, about 15 to 25 hours a week on this activity, but from week to week the hours you are spending may range from 15 to 40. Your activity is unplanned and irregular.

Your living expenses are primarily met through income generated through your gambling activity, but you have other sources of income such as your savings and cryptocurrency profits.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 section 8-1