Are Lottery Winnings Taxed in Australia?
Good news — all lottery winnings in Australia are completely tax-free. Here's what you need to know about how the ATO treats prize money.
Lottery Winnings Are TAX-FREE in Australia
The Australian Taxation Office (ATO) does not classify lottery winnings as assessable income. You receive 100% of your prize money — no deductions, no withholding tax.
How Lottery Tax Works in Australia
Under Australian tax law, lottery and gambling winnings are not considered assessable income. This covers all lottery prizes including Powerball, Oz Lotto, Saturday Lotto, Monday Lotto, Wednesday Lotto, Set for Life, and Lucky Lotteries. Whether you win $10 or $200 million, the full amount is yours to keep.
What IS Taxable After Winning
The prize itself is tax-free, but any income you earn from investing your winnings gets taxed. That includes:
- Interest income — Put your winnings in a savings account or term deposit? The interest is taxable.
- Dividend income — Invest in shares or managed funds? Dividends are taxable.
- Rental income — Buy investment properties? You'll need to declare the rent.
- Capital gains — Sell investments at a profit? Capital gains tax may apply.
- Business income — Start a business with your winnings? Profits are taxable.
Overseas Winners and International Tax
Australian lottery operators pay prizes tax-free no matter where the winner lives. But if you're from another country, your home country might still tax foreign lottery winnings. Here's how a few countries handle it:
- United States — US citizens must report all worldwide income to the IRS, including foreign lottery wins. Federal tax can hit 37%, plus state taxes on top.
- United Kingdom — No tax on lottery winnings, same as Australia.
- Canada — Generally no tax on lottery winnings.
- New Zealand — No tax on lottery winnings.
Australia vs Other Countries: Lottery Tax Comparison
| Country | Tax on Winnings | Tax Rate | $100M Prize After Tax |
|---|---|---|---|
| Australia | Tax-Free | 0% | $100,000,000 |
| United Kingdom | Tax-Free | 0% | $100,000,000 |
| Canada | Tax-Free | 0% | $100,000,000 |
| United States | Taxed (Federal + State) | Up to 37% | ~$63,000,000 |
| Spain | Taxed | 20% | ~$80,000,000 |
| Italy | Taxed | 20% | ~$80,000,000 |
| Germany | Tax-Free | 0% | $100,000,000 |
Set for Life Tax Considerations
Set for Life pays $20,000 per month for 20 years. Each monthly payment is tax-free, same as lump-sum prizes. But if you invest or save those payments, any returns are taxable. Over 20 years, that investment income can really add up.
Professional Gamblers
Australian tax law draws a line between recreational and professional gamblers. If you play the lottery for fun (like almost everyone), your winnings are tax-free. If the ATO decides gambling is your actual profession — extremely unlikely for lottery players — different rules kick in. This mainly applies to professional poker players and sports bettors, not lottery players.
Getting Financial Advice After a Big Win
Won big? Talk to a financial adviser before making any major moves. They can help you manage the money, keep tax on investment income low, and build a long-term plan. The Lott also offers confidential financial counselling to big winners. Check our claiming prizes guide for next steps, or see our biggest wins page for the largest prizes ever awarded in Australia.