Winning the lotto is good news in itself, but it turns out there are even more benefits to becoming an instant millionaire in Australia.
Those who win money on Lotto, instant scratchies or even by gambling can keep the whole of their prize without having to pay any tax.
H&R Block tax communications director Mark Chapman said there also wasn’t any need to declare the winnings during tax time, giving you one less thing to think about when doing your tax return.
Do I ever have to pay tax on Australian Lotto wins?
There are some instances where people may be caught out having to pay tax.
“What you do need to be careful of is any income you earn from your winnings,” Mr Chapman told Yahoo News Australia.
“If you put money in the bank and earn interest then that is a taxable amount.”
Mr Chapman said the same applied when it came to winning houses or cars rather than money.
“If you decide to sell the house then the proceeds of the sale will be subject to the capital gains tax,” he said.
“If you didn’t pay anything for the house, then you will have to pay capital gains tax on the entire proceeds.”
Australians pay capital gains tax as part of their income tax.
According to the Australian Taxation Office, a capital gain is the difference between what it costs a person to acquire an asset and what they received when they sold it.
Australians need to declare their capital gain when lodging a tax return and it could increase the tax you need to pay at the end of the financial year.
The Australian Taxation Office said people must declare on their tax returns the value of any prizes won through a draw run by a building society, credit union, bank or other investment body.
But those who do win other lotto draws and raffles are able to keep it all.
Game show contestants only have to declare their winnings if they receive regular winnings or money for appearing on the show.
What if I win the MegaMillions lotto overseas?
It’s still good news even if an Australian wins an overseas lottery.
Mr Chapman said if somebody living in Australia wins a lottery they are able to enter overseas, like the MegaMillions, they will still not be taxed on their winnings as Australian tax laws still apply.
Do other countries tax lotto winners?
According to Lotto.net, prizes won in Canada are tax-free but in the US there is an initial federal tax of 25 per cent for any prize more than $7200.
Winners in some states also face a further tax, depending where they purchased their entry.
There is a state tax between two and nine per cent in every state except for California, Florida, New Hampshire, Puerto Rico, South Dakota, Tennessee, Texas, US Virgin Islands, Washington State and Wyoming.
Some European winners are as lucky as Australians and most countries, including France, Ireland and the UK don’t tax lottery prizes.
Those who win more than $4000 in Spain however are taxed 20 per cent, while those in Switzerland face paying a 35 per cent tax on winnings over $1450.
Lotto.net says Polish players are taxed 10 per cent on prizes worth more than $1060.
In the Netherlands winners are taxed a massive 29 per cent on prizes above $640.
New Zealanders and South Africans manage to avoid having their winnings taxed but those in Brazil who play Mega Sena will be taxed 13.8 per cent of any win.
How do I claim my Australian lotto win?
Those lucky enough to score a huge prize should not expect to get it straight away so you might want to hold off buying that Ferrari.
The Lott spokesman Matt Hart told Yahoo News Australia winners who purchased tickets online or who registered them through a players club card would receive a phone call about 30 minutes after lotto numbers were drawn.
Those with an unregistered ticket will however remain a mystery until they themselves contact the Lott.
“If tickets are not registered we are very much relying on the ticket holder to check their entry themselves to discover the news before making contact with us,” Mr Hart said.
When will you receive the money?
The Lott gives winners the royal treatment, sending a bottle of champagne and an oversized novelty cheque to those who picked the lucky numbers.
Lucky division one winners need to hold onto tickets until they fill out a prize claim form and send the ticket off to the right authorities.
“We pay top prizes two weeks after the draw so people have time to get financial advice and sort some things out,” Mr Hart said.
Money will be sent to winners through electronic funds transfer and can take up to 24 hours after transfer to land in the account.
It is the same process for division two winners. They will have to fill out a prize claim form and deliver their ticket to an outlet or one of The Lott’s offices.
Winners of prizes under $1000 can receive their money almost immediately.
They can claim money from an outlet or funds will be deposited into the bank account the next business day after the ticket is cashed.
What happens if you lose your ticket?
Not all hope is lost if you lose your winning ticket, but is does make accessing your money slightly more difficult.
“There is a lost and found ticket process where basically they need to provide significant details about the ticket – where they bought it, how they bought it, how they paid for it – only details a ticket holder would know,” Mr Hart said.
“Then we will have to launch an investigation and that could take weeks to confirm they really are the ticket holder.
“It’s best just to hold on to your ticket.”
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