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, Bet-Easy, 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 loses $800,000. So, she lost more than she won in the end.

The woman receives Centrelink payments this whole 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?