Special arrangements

Gambling

Gambling is a special area of GST where operators generally account for GST on their margin, the amounts taken in less the winnings paid out, rather than on each bet.

Gambling supplies, such as betting on races, lotteries, casino games and poker machines, are treated under special GST rules because a normal calculation does not make sense. If GST applied to every wager at the full amount, the tax could exceed the operator's actual earnings. Instead, the law focuses on the operator's margin, which is the money received from players less the winnings paid out over a period.

For most gambling supplies, the operator is the one who must account for GST, and it does so on the net takings. In simple terms, the GST payable is one-eleventh of the margin for the tax period. If payouts exceed takings in a period, there is generally no GST payable for that period, and the negative margin can be carried or dealt with under the rules. The operator reports the amounts on its Business Activity Statement.

For players, the GST is built into the way the game is priced and is not shown as a separate amount on each wager. A customer buying a bet or a ticket does not usually receive a tax invoice in the way a customer would for a shop purchase. Winnings paid to players are generally not subject to GST, because the operator is not buying anything from the player.

Businesses that provide goods or services connected to gambling, such as a pub supplying meals or a company that builds or leases gaming machines, are not in the same position as the operator. Their supplies are generally taxable in the ordinary way, and they follow the normal GST rules. A hotel with gaming machines may therefore have both ordinary sales and gambling margin to report.

The rules about gambling also interact with other taxes. State and territory governments charge their own gambling taxes and levies, and those are administered by state revenue offices and gaming regulators, not the ATO. Rates and rules vary by jurisdiction. Operators therefore need to manage both the federal GST and the relevant state obligations, and the two do not replace each other.

A common mistake is to treat gambling income like ordinary sales and report GST at one-eleventh of total takings. Another mistake is to assume that all supplies related to gambling are input-taxed. In general, the gambling margin is taxable, but the precise treatment can depend on the type of activity and who is making the supply.

The GST on gambling can be complicated, so this page is general information only. Operators should confirm the details with the ATO or a registered tax professional.

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