When gambling is considered a hobby and when it is considered a business
When gambling is considered a hobby and when it is considered a business
Current on: 11 August 2025
Short conclusion
In Australia, gambling is considered a hobby if conducted for entertainment and without the purpose of systematic profit. If the game is regular, organized and profitable, the ATO classifies it as a business, which entails tax liabilities.
1. ATO position
The Australian Taxation Office (ATO) does not have a separate law that clearly defines the border between hobbies and business in gambling, but relies on a set of signs.
Status affects whether winnings are taxable:
2. Signs of a hobby
The game is irregular and not on a strict schedule.
There is no business plan or system strategy.
Game revenue is not the main source of funds.
Participation is entertaining, without focusing on long-term profits.
There is no detailed financial reporting on bets and winnings.
Example:
3. Signs of business in gambling
Constant and regular play with a clear strategy.
Use of analytics, software, calculation models.
Availability of investments in the development of gaming activities (travel, training, equipment).
Gaming and betting are the main source of income.
Accounting and financial reporting.
Example:
4. Borderline situations
The player can start as an amateur, but with an increase in regularity and income, his activities are retrained into a business.
The ATO considers a combination of factors rather than a single trait. Even irregular play can be considered a business if profits are stable and significant.
5. Tax implications
Hobbies: no tax on winnings, no need to declare income from the game.
Business: tax on income at rates for individuals or a registered company, the possibility of writing off expenses related to activities.
6. Recommendations to players
Evaluate the frequency of play, income level and approach to the process.
With regular profits, keep records and be ready for tax reporting.
With unclear status - request private ruling from ATO.
Do not hide the proceeds of gambling if they are commercial in nature.
Conclusion
The difference between hobbies and businesses in gambling in Australia is determined by the purpose, scale and regularity of the activity. For fans, winnings are tax-free, for professionals it is income that needs to be declared. A clear understanding of your status will help you avoid ATO problems and penalties.
Current on: 11 August 2025
Short conclusion
In Australia, gambling is considered a hobby if conducted for entertainment and without the purpose of systematic profit. If the game is regular, organized and profitable, the ATO classifies it as a business, which entails tax liabilities.
1. ATO position
The Australian Taxation Office (ATO) does not have a separate law that clearly defines the border between hobbies and business in gambling, but relies on a set of signs.
Status affects whether winnings are taxable:
- Hobbies - winnings are tax-free.
- Business - winnings are considered taxable income.
2. Signs of a hobby
The game is irregular and not on a strict schedule.
There is no business plan or system strategy.
Game revenue is not the main source of funds.
Participation is entertaining, without focusing on long-term profits.
There is no detailed financial reporting on bets and winnings.
Example:
- The Sydney resident plays online slots a couple of times a month, spending small amounts. Even with a win of 50,000 AUD, no tax applies.
3. Signs of business in gambling
Constant and regular play with a clear strategy.
Use of analytics, software, calculation models.
Availability of investments in the development of gaming activities (travel, training, equipment).
Gaming and betting are the main source of income.
Accounting and financial reporting.
Example:
- The Melbourne-based professional poker player competes in scheduled tournaments, has sponsors and earns AUD 180,000 a year. ATO recognizes his activities as a business.
4. Borderline situations
The player can start as an amateur, but with an increase in regularity and income, his activities are retrained into a business.
The ATO considers a combination of factors rather than a single trait. Even irregular play can be considered a business if profits are stable and significant.
5. Tax implications
Hobbies: no tax on winnings, no need to declare income from the game.
Business: tax on income at rates for individuals or a registered company, the possibility of writing off expenses related to activities.
6. Recommendations to players
Evaluate the frequency of play, income level and approach to the process.
With regular profits, keep records and be ready for tax reporting.
With unclear status - request private ruling from ATO.
Do not hide the proceeds of gambling if they are commercial in nature.
Conclusion
The difference between hobbies and businesses in gambling in Australia is determined by the purpose, scale and regularity of the activity. For fans, winnings are tax-free, for professionals it is income that needs to be declared. A clear understanding of your status will help you avoid ATO problems and penalties.
