Private ruling: Am I in business - gambling
Date of advice: 15 December 2025
Published: 2 February 2026
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: DD MM 20XX

Ruling: Q1: Is the income derived from your betting activity assessable under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: No.

Relevant facts and circumstances: Approximately X years ago you deposited money into an online betting platform. The online betting platform allows wagering on real-world events. You gamble primarily on political and geopolitical events. You choose events based on your personal interest, current events in the news, and trending events on the site. Since starting, you estimate that you have spent on average 1.5 hours per day looking at events, prices, comments, and placing bets. This number varies dramatically on a day-to-day basis depending on whether there are any upcoming events you are interested in. You describe your usage as sporadic, with up to weeks of minimal activity. You place bets manually using either manually limit orders or market orders on events. Limit orders are either filled, expire, or you cancel them manually. When events resolve, your bets are redeemed as cryptocurrency. You have been working full-time during this period. Your profession is unrelated to your betting and wagering activities. You do not have any skills or background related to the events you bet on. You do not view the online betting activity as your job or career. You do not have staff, business premises, or expenses of any kind. You do not have a business plan in relation to the activity. You do not use professional systems, software, or automation in relation to your activity. You have no system for managing risk or preventing losses. You bet only what you are willing to lose. You originally joined out of interest in politics. Wagering on politics has been a hobby of yours for several years. Before using the platform, you placed bets on other online gambling websites, and you believe you have overall lost money on these sites. You continue betting via the platform so long as you find the activity enjoyable. You are motivated by personal enjoyment and intellectual engagement with political events. You estimate that you have participated in X total different markets/events. You have never kept your own records. You haven't created any reports in relation to your activity. You made one minor withdrawal from your winnings.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 Division 118 | Income Tax Assessment Act 1997 paragraph 118-37(1)(c) | Income Tax Assessment Act 1997 section 995-1

Reasons for decision: Detailed Reasoning - Assessable income: Your assessable income includes the ordinary income derived directly or indirectly from all sources under section 6-5 of the ITAA 1997. Ordinary income is referred to as income 'according to ordinary concepts'. This generally includes income from rendering personal services, income from property, and income from carrying on a business. Division 118 of the ITAA 1997 contains the exemptions from capital gains tax (CGT). In particular, paragraph 118-37(1)(c) of the ITAA 1997 disregards a capital gain or loss from a CGT event related to gambling, a game, or a competition with prizes. If the gambling activities constitute the carrying on of a business, the gains from the activity would be assessable under section 6-5 of the ITAA 1997. | Detailed Reasoning - Carrying on a business: 'Business' is defined under section 995-1 of the ITAA 1997. It includes any profession, trade, employment, vocation or calling, but does not include occupation as an employee. The Commissioner considers various indicators to determine whether a business is being carried as contained in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? (TR 97/11). Although this ruling discusses primary production businesses, the indicators can be applied broadly to any business. Paragraph 13 of TR 97/11 lists the 8 business indicators as follows: • whether the activity has a significant commercial purpose or character, • whether the taxpayer has more than just an intention to engage in business, • whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity, • whether there is repetition and regularity of the activity, • whether the activity is of the same kind and carried on in a similar manner to that of the ordinary trade in that line of business, • whether the activity is planned, organised and carried on in a businesslike manner such that it is directed at making a profit, • the size, scale and permanency of the activity, and • whether the activity is better described as a hobby, a form of recreation or a sporting activity. No single indicator will be decisive in determining whether a business is carried on. Whilst each case might turn on its own particular facts, the determination of the question is generally the result of a process of weighing all the relevant indicators. The indicators must be considered in combination and as a whole. | Detailed Reasoning - Gambling and betting: Gambling or betting can be carried on as either a business or a hobby. Winnings derived from gambling or betting are only assessable under section 6-5 of the ITAA 1997 if you are carrying on a business of betting or gambling. Taxation Ruling IT 2655 Income tax: betting and gambling - whether taxpayer carrying on business of betting or gambling (IT 2655) was issued following the Federal Court decisions in Evans v Federal Commissioner of Taxation (1989) 20 ATR 922 ( Evans ), Babka v Federal Commissioner of Taxation (1989) 20 ATR 1251 ( Babka ), and Brajkovich v Federal Commissioner of Taxation (1989) 20 ATR 1570 ( Brajkovich ). The issue in each of these cases was whether a taxpayer with no businesslike connection with the racing industry (e.g. as a trainer or breeder of horses) was carrying on a business of betting or gambling on races. In Evans , Hill J of the Federal Court acknowledged that mere punting could potentially constitute a business but concluded that the taxpayer was not carrying on a business based on the facts. He emphasised that for a punter to be considered as conducting a business, their betting activities must be systematic and aimed at securing the most favourable odds. While the volume and size of bets are relevant, they are not decisive. What was missing in the taxpayer's case was a structured or organised approach. They did not maintain an office or employ any staff to assist them; they did not keep any records; they did not use a computer or subscribe to any tipping or information services and did not spend a lot of time studying form. These absences led to the conclusion that the taxpayer's gambling lacked the necessary elements of a business. In Babka , the Federal Court again assumed that mere punting could, in some cases, amount to a business, but found that the taxpayer's activities did not constitute a business. Following some guiding principles, the taxpayer mainly relied on judgment and instinct when selecting horses and placing bets. This absence of system and organisation meant their activities resembled those of a keen hobbyist, not a business operator. Hill J acknowledged that with modern tools like computers, punting could potentially become systematic and profit-driven enough to be considered a business. However, he cautioned that due to the element of chance inherent in gambling, it would be rare for such activity to meet the threshold of a business. In Brajkovich , the Full Federal Court outlined key criteria for determining whether gambling amounts to a business. The court also added that gambling which involves a significant element of skill is more likely to have tax consequences than gambling on merely random events. While no Australian court has definitively held that a taxpayer's gambling activities did constitute a business, the courts have consistently stated that it is possible, but only if the activity is highly organised, systematic, and profit-driven. Under IT 2655, the Commissioner outlines 6 principal criteria for determining whether a person is in the business of betting, which are: • whether the betting is conducted in a systematic, organised and businesslike way; • the scale of the betting activities; • whether betting is related to or part of other activities of a businesslike character; • whether the activity is principally for profit or principally for pleasure; • whether the form of betting chosen is likely to reward skill and judgment or depends purely on chance; and • whether the activity is of a kind ordinarily thought of as a hobby or pastime. These criteria must be considered collectively and, in their entirety, to determine whether gambling or betting is conducted in a highly organised, systematic, and profit-driven manner. | Detailed Reasoning - Application to your circumstances: We have considered your circumstances in relation to the criteria from IT 2655 as follows: Whether the betting is conducted in a systematic, organised and businesslike way • You do not maintain a plan, systems, or processes beyond conducting research and placing manual orders. There is no evidence that you adopt risk management rules, conduct intensive research, or keep records of profits and losses. • You activity lacks the sophistication that would be expected for a gambling or betting business. Your activity is therefore not conducted in a systematic, organised, or businesslike way. Whether the betting is related to or part of other activities of a businesslike character • You do not conduct the activities as part of another business. Whether the betting activity is principally for profit or principally for pleasure • You participate to enjoy and engage with political events. You are not financially reliant on the gambling profits as you have full time employment. You have only once withdrawn any of your winnings since beginning your activity. Your activity is therefore principally for pleasure. • The scale of the betting activity is small, as you initially deposited a small amount into the platform and have not made any further contributions. You spend approximately 1.5 hours each day on the activity. Your current profit is relatively substantial. Whether the form of betting chosen is likely to reward skill and judgment or depends purely on chance • The outcome of the wagering on the platform is generally dependent on chance. You have no system in place and no relevant experience in the types of betting you conduct. It cannot be said that your winnings are a reward for skill or experience. Whether the betting activity is of a kind ordinarily thought of as a hobby or pastime. • Your activities on the platform will constitute as betting due to the fact that they are wagering on the outcome of real-life events that have no relevance on the bet itself. The activity of betting is ordinarily thought of as a pastime. | Detailed Reasoning - Conclusion: Your betting activity does not demonstrate the principal criteria for carrying on a business of betting from IT 2655. Furthermore, your activity does not exhibit the business indicators from TR 97/11. Despite being profitable, your activity is not organised in a systemic or businesslike way, the size and scale is small, it is conducted in a sporadic manner, lacks sophistication, and it could be better described as a hobby. The Commissioner considers that your betting activity does not constitute the carrying on of a business. A capital gain or loss from your gambling activity will be disregarded under paragraph 118-37(1)(c) of the ITAA 1997. Any winnings received from your betting activity will therefore not be assessable income under section 6-5 of the ITAA 1997.