Image: Casino.org American Tax Season Is Here. The US uses a flat 25% tax rate on all gambling winnings. Taxes are applied to all gambling, including sweepstakes and other prizes. Smit says for tax purposes, the treatment will be the same as National Lottery winnings – it will be capital in nature (not gross income) and so not subject to tax or capital gains tax.

Changer roulette valise samsonite. If you have won a lottery prize in South Africa, you might be wondering if your winnings are going to be taxed. You can find out about the laws surrounding tax on lottery winnings on this page, and discover the different circumstances in which your winnings could be subjected to taxes, domestic or foreign.

Tax on Lottery Winnings

Simply put: there is no tax to pay on lottery prizes won in South Africa. Any amount of money won in a lottery is considered capital in nature and therefore exempt from Income Tax. Lottery prizes also benefit from a special exemption from Capital Gains Tax, meaning no tax is payable on lottery winnings of any size.

There is one rare exception to this. If you play the lottery or undertake any form of gambling professionally - and regularly win prizes to the extent that your winnings are your primary source of income - this money will be taxed just like other forms of income.

Even if you do not play the lottery professionally, it is nonetheless recommended that you notify the South African Revenue Service (SARS) of any prize won in order to avoid the chance of being unnecessarily taxed on your winnings in future.

Donations Tax

If you were to distribute any lottery winnings to friends or family, that amount may be subject to something called Donations Tax. Donations of up to R100,000 per year are tax-free, with any amount above this taxed at 20%.

For example, if you won R9,000 and gave R3,000 to a friend, that donation would be exempt from Donations Tax. On the other hand, if you won R400,000 and gave R150,000 to a friend, the Donations Tax to be paid would be R10,000 (20% of R50,000). It is the donor’s responsibility to pay the tax by filling in an IT144 tax form and submitting it to SARS before the end of the following month.

If you run a lottery syndicate in South Africa, this tax could affect the distribution of winnings to other syndicate members. Lottery tickets can only be owned by a single individual, and not collectively owned by a group. A syndicate is an agreement, outside of the National Lottery, to pool entry costs and split any prizes – meaning the responsibility for sharing prize money with other syndicate members rests with the named ticket holder. If each syndicate member receives more than R100,000, they would be liable to pay Donations Tax.

Taxation Abroad

If you are a non-resident of South Africa and you donate money to a South African resident, the money is exempt from Donations Tax, and neither party would have to pay.

If you play international lotteries from South Africa, there may be tax laws in those countries that come into effect before you receive your winnings. For example, the United States government imposes a 25% federal tax on any Mega Millions prize above $5,000.01, while the jackpot is subject to a 39% federal tax withholding. On top of that, each U.S. state has its own tax withholding on Mega Millions prizes won on tickets bought there.

Tax withholdings are so named because the taxed money is 'withheld' from the winner by the lottery provider in question; if you win the Mega Millions jackpot through a lottery concierge service, the 39% will already have been deducted when you collect your winnings. In the case of withholdings, you do not need to do anything further to honour the tax. Consult a financial advisor for further questions on your responsibility for foreign taxation.

If you were to claim any SA lottery winnings from abroad, you could be subject to taxation in your country of residence. Consult a financial advisor to find out more about the tax laws in your country.

Looking abroad: Some possible insight into South Africa’s forthcoming gambling tax

Gambling Tax South Africa 2019 Schedule

In the 2019 Budget Speech, the Minister of Finance announced that draft legislation pertaining to the long-awaited gambling tax would be published for public comment in 2019. We discussed this announcement in our Special Edition Budget Speech Alert of 20 February 2019. The draft legislation will possibly be published with the draft Taxation Laws Amendment Bill in the next few months, but while we wait for the release of the draft legislation, we take the opportunity to consider some of the issues that have arisen with gambling tax in foreign jurisdictions.

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Gambling Tax South Africa 2019 Public Holidays

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Tax on Lottery Winnings

Donations Tax

Taxation Abroad

Looking abroad: Some possible insight into South Africa’s forthcoming gambling tax

Gambling Tax South Africa 2019 Schedule

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Gambling Tax South Africa 2019 Public Holidays

Gambling Tax South Africa 2019 Online

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