If you're participating in Australian online betting and want to make your income legal, you will have to pay the corresponding taxes. In this article, we will cover the main aspects of such taxes: when it is applied, how to lodge a return, how to calculate your tax and more.
Key Information
The tax is applied to the bookmaker or the person in Australia at the moment of betting. It is the bookmaker's responsibility to know the location of the bettor to calculate and apply the tax correctly. In most cases, the bookmaker simply asks for the residential address at registration. In a perfect scenario, the bookmaker shall know the bettor's location constantly, but the laws allow using the address of residence too.
The tax has to be paid after the revenues reach the level of AU$150,000 for the last year. The revenue that is over this level is taxed by 15%. The bookmaker also has to keep all the records of operations for at least five years.
Lodging a Return
Lodging and paying monthly returns is easy and is made through the Revenue Online service. You have to perform the procedure before the 28th day of the next month. Note that you have to do it even in case you had no income or revenue during the period. Not lodging or not paying the return may result in a penalty being applied.
Calculating the Revenue
You have to report the revenue each month, and it is calculated by subtracting all the eligible payments from the betting revenue. The latter includes:
- the fees charged for betting exchange services;
- retained winnings from the blocked or suspended accounts;
- general bets;
- other income related to betting operations.
The first parameter we have mentioned is the eligible payments, and it also consists of several components. In general, this is the total amount of payments the bookie makes to the bettors during their cash-outs. However, there are some details you need to know. For pool bets, the operator's pool contributions are also counted as an eligible payment. Non-cash rewards, business expenses and advertising expenses are not considered eligible payments. As you could have guessed, for exchange platforms, there are no eligible payments as they don't use their own funds in the process of betting.
Calculating the Tax
At the point you have correctly determined your revenue, calculating the tax is easy. However, to visualize the whole process, we shall review an example of calculating everything. After following the procedure step-by-step, you will surely learn it and make no mistakes in your own calculations. The initial data for our example is presented in the table below.
| Month | Revenue |
| September | AU$200,000 |
| October | AU$300,000 |
| November | AU$10,000 |
| December | AU$250,000 |
Step 1. Calculating the Revenue Year to Date
The first thing you have to do is to calculate the revenue year to date, as it will be used in later calculations. To do it, simply calculate the cumulative value for each period. The results for the corresponding months would be as follows:
- September: AU$200,000.
- October: AU$500,000.
- November: AU$510,000.
- December: AU$760,000.
Step 2. Calculating the Tax Payable Year to Date
As you remember, the tax of 15% is applied to all the revenues that exceed AU$150,000. Here we have to calculate the year to date amount. The tax for September would be calculated by the following formula: (AU$200,000 – AU$150,000) * 15%. The results for the periods will be:
- September: AU$7,500.
- October: AU$52,500.
- November: AU$54,000.
- December: AU$91,500.
Step 3. Calculating the Tax Payable for Each Period
As you have to lodge a return and pay the tax every month, you also have to calculate the payable amount. To calculate it for a specific period, you have to subtract the amount you paid for all the previous periods this year from the payable year to date amount for the current period. Therefore, for October, it will be calculated as follows: AU$52,500 – AU$7,500. The results for each period will be:
- September: AU$7,500.
- October: AU$45,000.
- November: AU$1,500.
- December: AU$37,500.
