Life Would Be a Dream?

Hi Scott, 

I am curious as to the tax situation if someone wins the new ‘Set For Life’ Lotto, and no, I haven’t won it. Because you are paid monthly instead of in the usual lump sum, would it be classed as income and therefore taxable?

Bron

Hi Bron,

No, it will be completely tax free. That’s because gambling winnings are classified by the Tax Office as a “windfall gain or a prize”, because they’re earned without any skill.

I hate Lotto for the same reason I hate credit cards: they’re a tax on low income earners who can’t do maths. The chance of picking up the Set for Life first prize is 1 in 38,608,020.

Yet what’s interesting about this new lotto game isn’t the odds — they’re always terrible — but the way it’s marketed. On the official Set For Life website, it says: “Everyone’s heard stories of people that won the lottery and it ruined their life, it happens to some in a matter of months who confess to being worse off after they purchased that life changing ticket than they were before.”

Wowsers.

In other words, “you’ll only blow a multi-million-dollar payday, so we’ll hold on to the money for you, and dish it out over 20 years”. (And if you don’t see what the catch with this, you’re probably Lotto’s ideal customer.)

Someone who understands money would say: “Actually, just give me the $4.8 million today, and I’ll invest it in shares, and in 20 years it’ll be worth $22 million.”
On second thoughts, no they wouldn’t. Smart people don’t play the Lotto. Set For Life is for losers. Same dodgy odds, different spin. They’re just framing it for stupid people.

Scott