Private ruling: Gaming activities
Date of advice: 26 August 2015
Published: August 2015
Ruling period: Year ending 30 June 2016
Date scheme commenced: 1 July 2015

Ruling: Question and answer | Will any winnings you receive from a foreign online gaming program be assessable as income in Australia? | No.

Relevant facts and circumstances: A foreign e-gaming company is launching a new subscription online instant scratch card game or program that will be regulated under licence and supervision of the relevant foreign authorities. You have pre-registered to participate in the gaming program. You have to be an account holder to participate and are required to provide evidence of your identity and country of residence. The program is not being mass marketed and will instead rely on word of mouth or personal referral by other players. Players who refer new account holders will receive credits which can be exchanged for bonus instant scratch cards. There is a minimum monthly subscription amount payable from which an administration fee is deducted and a number of scratch cards issued to the participant. Additional scratch cards can be purchased over and above the minimum subscription. Winning cards will contain prizes of varying amounts. Winnings can be transferred to the participant's bank account or used to purchase new scratch cards. There is no guarantee of winnings from the instant scratch cards.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5

Reasons for decision: Summary: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes income according to ordinary concepts (ordinary income) derived from all sources, whether in or out of Australia, during the income year. Ordinary income has generally been held to include three categories, namely income from rendering personal services, income from property and income from carrying on a business. Other characteristics of ordinary income that have evolved from case law include receipts that: are earned, are expected, are relied upon, or have an element of periodicity, recurrence or regularity. Winnings derived from prize draws and games of chance do not have the characteristics of ordinary income and are considered to be windfall gains. In your case, you will be participating in an online instant scratch card gaming program and may also receive bonus scratch cards for introducing new participants to the game. There will be no guarantee of success and any monetary amounts you derive will be of a random nature. Based on the information provided, any winnings you receive from participating in the gaming program will be in the nature of a windfall. Therefore, any winnings will not constitute ordinary income and will not be assessable as income under section 6-5 of the ITAA 1997.