Andrew has done some research but wants to know how Centrelink assesses gambling winnings and losses.
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Q. Andrew
I have read your answer from a year ago about Lotto winnings. Thank you. However, I have a hypothetical scenario.
A woman bets online on sports apps (TAB, Sportsbet, etc), which is a game of skill, not chance. She spends the winnings on more bets, and loses and wins.
She spends $1 million on bets in a financial year and wins $800,000. So, she lost more than she won in the end.
The woman receives Centrelink payments this entire time. Does Centrelink regard the winnings not as income because she spent the winnings on more bets, and lost in the end?
Or does Centrelink say her income on top of Centrelink was $1 million for the year?
Is this a case-by-case basis?
A. Due to the precise nature of this question, and the financial implications, YourLifeChoices contacted Services Australia for a reply. The following is their advice.
Services Australia general manager Hank Jongen says he would encourage people with complex circumstances to speak with Centrelink about their specific situation and any changes in their circumstances, including large amounts of winnings from gambling.
“Most types of income count in the income test. We use this and your assets test to assess if you can get a payment, and to calculate your rate of payment,” Mr Jongen says.
Game of skill
“Periodic winnings from gambling are assessed as income for the period to which they relate.
“This includes periodic winnings earned by skill, a mix of chance and skill, or winnings you get by chance that are paid to you over time.
“If your winnings are earned by a mix of chance and skill while undertaking your profession, such as a professional gambler, you may be assessed as running a business and need to provide us with your income tax return and financial statements including your profit and loss statement.
“Generally, you’re considered a professional gambler if you declare this on your tax returns.
“Losses from gambling are only treated as valid expenses when your gambling income is assessed as part of a business structure.
“I’m sure most Australians would not consider it reasonable for the taxpayer to subsidise professional gamblers who regularly win large amounts of money.
“It’s important to remember this is based on the principle that people should rely on their own funds to support themselves before asking for income support from the taxpayer.”
What is income?
According to Services Australia, the definition of income in the Social Security Act 1991 is broad. Unless specifically exempted in the legislation, few income amounts are excluded.
All periodic returns from gambling are assessed as income, irrespective of whether a person is a professional gambler or not. However, where the winnings are received by a person as part of a professional gambling business, they can be offset by allowable business deductions.
Regardless, if the winnings are assessed as income or not, the resulting assets are assessable under the normal assets test. Deprivation is assessed if the winnings are gifted, and deeming is applied if they are held as financial assets.
Lottery winnings provided as a single lump sum are exempt from the income test.
Anyone can talk to Services Australia’s free Financial Information Service about how changes in their income and assets, including from gambling, may affect their payment. Find out how to contact them here.
Find out more about the income test here, and the assets test here.
Do you gamble? Do you think the Centrelink rules about gambling income are fair? Why not share your opinion in the comments section below?
Also read: Do I have to tell Centrelink about my superannuation?
Call me dopey but I can’t understand how a person would be receiving Centrelink payments if they had $1,000,000 to run around punting/gambling. Obviously they would have made a false declaration to Centrelink by not divulging their true financial status, which is fraud and they should receive a custodial sentence. That’s All, Jacka.
Jacka,
I believe it was only a hypothetical question & cash amount put forward. The person could of just used $1,000 instead of a $million. I don’t even have $1,000 in my bank account. Lord if I ever was lucky enough to have that sort of cash then I would never use it gambling.
It’s a hypothetical question as was asked. Mainly to get clarification from Centrelink.
After reading the extremely confusing reply from the GM of Centrelink I would suggest keeping this activity on the quiet and to oneself.
It’s obvious from the reply that pension payments are so complex that I doubt Centrelink themselves know how to assess many situations.
This is just another reason for Australia to introduce a universal pension at age (now) 67 at a single rate (not couple) with no income or asset testing. Will be a straight forward payment with no complications and pretty much rort free and save billions in admin cost.
Well it would be a rather stupid hypothetical question as $1,000,000 automatically removes you from play. Also very bad terminology from Andrew, if you bet $1,000,000 & win $800,000 you have a total of $1,800,000. The said person bet $1,000,000 & lost $200,000 leaving them with $800,000. People who obviously know little about gambling should not create scenarios about gambling. If a person invested $50 on a first four or trifecta and won say $10,000 they would be required to advise Centerlink and their pension payments would be adjusted accordingly. If they put in a Tax Return, they would only have to pay tax on the money earned on the $10,000. The End. Jacka.