The taxation of horse racing winnings depends on an individual’s status as a professional or non-professional punter. The winnings of a non-professional gambler are not taxable.

Non-Professional Punter:

For non-professional punters, the tax treatment of horse racing winnings is generally straightforward. Occasional gambling or betting winnings are generally not considered assessable income. This means that if an individual occasionally places bets on horse racing and wins, those winnings are typically not subject to income tax.

The ATO views gambling as a recreational activity for most individuals, and any winnings are regarded as the result of good luck or chance rather than a regular income-earning activity. Therefore, non-professional punters do not need to include their gambling winnings in their assessable income.

Professional Punter:

The tax treatment for professional punters is different, as their gambling activities are regarded as a business or income-producing activity. A professional punter is someone who engages in horse racing gambling on a regular or systematic basis with the intent of making a profit.

The ATO considers professional punters to be carrying on a business, and their winnings are assessable income.   A professional punter is required to report their gambling winnings as income and can also claim deductions for associated expenses incurred in the course of their gambling activities, such as betting costs, form guides, and professional advice fees.

What about if a punter subscribes to a horse racing tipping system

A punter who subscribes to a horse racing system or follows a particular methodology for their bets can fall into either the professional or non-professional category, depending on the specific circumstances. It ultimately depends on whether the individual is engaging in gambling as a business or as a recreational activity.

If a punter using a system is betting on a regular or systematic basis and has the intent of making a profit, they may be classified as a professional punter. On the other hand, if the punter is using the system occasionally and the gambling activity is more recreational in nature, they may be considered a non-professional punter.

It’s important to note that each case is evaluated on its individual facts and circumstances. The ATO will consider factors such as the punter’s level of skill, the frequency and size of bets, the amount of time dedicated to gambling, and the overall businesslike approach to determine whether the punter is operating as a professional.