A professional gambler in Australia pays income tax on betting only if the betting is carried on as a business. If it is, the winnings are assessable income and the losses can be deductible; if it is not, neither counts for tax. The ATO's ruling on the question, IT 2655, considers a business of betting rare for anyone whose involvement in racing begins and ends with the bets.
Being called a professional does not settle it, and neither does a big turnover or a winning record. The ruling weighs the facts against criteria drawn from three 1989 Federal Court cases, and in none of those cases was the punter held to be in business.
The four factors IT 2655 weighs
IT 2655 adopts the main criteria the Full Federal Court listed in Brajkovich, and says the points raised in Evans and Babka should be taken into account with them. No single factor decides the question, and the ruling sets no turnover or profit figure that does.
| Factor | What the ruling records | What it looks like in betting |
|---|---|---|
| Systematic, organised and businesslike conduct | In Evans, what was lacking was "the element of system or organisation" | A written method, a record of every bet, set staking rules, research or data services |
| Volume and size | In Evans, the volume of punting and the size of bets were not decisive on their own, though not irrelevant | Turnover and stake sizes across the year |
| Links to other businesslike activities | Breeding horses is the ruling's example, and betting alongside other racing business makes a business more likely | Training, breeding or other racing work beside the betting |
| Profit or pleasure | Whether the gambler appears to bet principally for profit or principally for pleasure | Why you bet, and whether the sport and the excitement are the main draw |
Skill counts too: the Full Court said gambling that involves a significant element of skill is more likely to carry tax consequences than gambling on merely random events. Matched betting and arbitrage sit closer to the system factor than most punting, and tax on systematic betting applies the factors to them. Separately from tax, many bookmakers' terms limit or forbid automated betting, third parties using an account and multiple accounts, and a bookmaker may restrict stakes, void bets or close the account.
The ATO's general guidance, Are you in business? (updated 15 April 2026), adds plain questions for any activity:
- Do you intend to be in business?
- Do you intend to make a profit, with a prospect of doing so?
- Is the scale enough to make one?
- Is the activity repeated and continuous, and is it planned, organised and run in a businesslike way, with records, a separate bank account or a business plan?
The more yes answers, the more likely a business. That guidance is written for every kind of activity, while IT 2655 is the ATO's ruling on betting.
The three 1989 cases in plain terms
IT 2655 was issued because of these decisions, and its own summaries are the basis for what follows. In Evans and Babka the result was that the punter's winnings were not assessable; in Brajkovich it was that the losses were not deductible.
Evans: no system, no business
In Evans v Federal Commissioner of Taxation (89 ATC 4540), Justice Hill was prepared to assume that punting could be a business, but found that Evans was not carrying one on. Evans kept no office, staff or records, used no computer, subscribed to no tipping or information services and spent little time studying form.
His preference for the tote over bookmakers, and for quinellas, trifectas and other exotic bets, struck the judge as inconsistent with a money-making, businesslike approach. Justice Hill added that if a mere punter is ever held to be in business, it will be because the betting is run systematically to get the most favourable odds obtainable.
Babka: a keen follower of the turf
Babka (89 ATC 4963) followed no betting system, though he bet by several guiding principles, and judgment and instinct shaped his choice of horse, bet type and amount. Justice Hill found that enough to negate the system and organisation a business needs: the betting did not go beyond that of "a keen follower of the turf".
He said modern technology such as computers could make punting so organised, systematic and profit-focused that it becomes a business. He also said that chance, as the main ingredient in a race's outcome, means it will be a rare case where a court finds one.
Brajkovich: large losses, still no business
The Full Federal Court (Pincus, French and Gummow JJ) decided Brajkovich (89 ATC 5227) and set out the four factors in the table. Brajkovich had a passion for gambling on a large scale that went back to his youth, and the court found that sport, excitement and amusement were the main attraction.
In its words, "merely indulging that, without more, is not engaging in a business", so his gambling losses were not deductible. It said gambling as ordinarily conducted would seldom be a business even where large gains or losses are involved.
Why most punters never meet the test
Chance is the main reason. IT 2655 relies on Justice Hill's words in Babka: although punting may be a business, "the intrusion of chance into the activity as a predominant ingredient" generally precludes such a finding. The ruling builds on that: where betting is a person's only tie to racing, the Commissioner considers a business of betting rare, and each case depends on its own facts.
The ruling's own summary of the case law, written in 1991, is that no Australian court had then held a mere punter's winnings assessable or losses deductible. It describes the cases decided by that date.
What makes a business more likely, on the ruling's own terms, is betting alongside other business activity in the racing industry, or betting with a significant element of skill. Neither is a box that settles the question once ticked.
A large year, in either direction, leaves the question where it was. What full-time betting involves day to day, beyond tax, is in the professional punter guide.
What changes if betting is a business
If betting is a business, its winnings are assessable income, and its losses and running costs, such as data subscriptions, can be deductible under the usual rules for business deductions. The ATO's guidance on business income draws the same line: betting and gambling wins are left out of assessable income unless you operate a betting or gambling business (updated 7 May 2025).
It is not a status you choose year by year. The facts decide it, which is why Brajkovich's large losses earned him no deduction. The table shows the mechanics with illustrative figures for one punter over two years.
| Illustrative year | Net betting result | Running costs | If the betting is not a business | If it is a business |
|---|---|---|---|---|
| Year 1 | Ahead $18,400 | $2,600 | Nothing assessable, nothing deductible | Taxable profit of 18,400 - 2,600 = $15,800 (winnings assessable, costs deducted) |
| Year 2 | Behind $9,700 | $2,600 | Nothing deductible | Loss of 9,700 + 2,600 = $12,300, set against other income only if the non-commercial loss rules allow, otherwise deferred |
Over the two years the punter is 18,400 - 9,700 = $8,700 ahead before costs. If the betting is not a business, none of that is taxed and none of the 2,600 x 2 = $5,200 of costs is deducted. If it is a business, $15,800 is added to taxable income in year 1, and the $12,300 loss reduces tax only in a year the rules let it be used.
For an individual, the ATO's non-commercial loss rules decide whether a business loss can come off other income, such as a salary, in the year it is made. As at 7 October 2026 they require:
- A business that has actually started, not one still being prepared.
- Taxable income, reportable fringe benefits, reportable super contributions and total net investment losses adding up to less than $250,000.
- One of four tests passed: at least $20,000 of assessable income from the activity in the year, or a profit in 3 of the past 5 years. The other two are at least $500,000 of real property, or at least $100,000 of other assets, used in the activity.
Otherwise the loss is usually deferred until the activity makes a profit, and the Commissioner's discretion is available only in limited circumstances.
Risk: Betting involves risk. The two years in the table are made up to show the tax mechanics, results swing from one year to the next, and past results are no guarantee of future results. See responsible gambling for limits and support.
What people get wrong about professional punter tax
| What is often said | What the sources say |
|---|---|
| Evans shows a punter can be taxed | The court found Evans was not in business, and his winnings were not assessable |
| Turn over enough and betting becomes a business | IT 2655 sets no figure, and volume and size are not decisive on their own |
| Professional is a label you choose | The facts decide it, case by case |
| A business loss always comes off your salary | For individuals, the non-commercial loss rules can defer it |
| No punter can ever be taxed | The ruling's 1991 statement covers the cases decided by then, and it accepts that a punter can be in business |
How to get the ATO's answer on your own betting
You can ask the ATO directly. A private ruling sets out how a tax law applies to your circumstances, and it legally binds the ATO if it applies to you and you rely on it. When the question is whether you are carrying on a business, the ATO asks for supporting information like this:
| What the ATO asks for | What it means for betting |
|---|---|
| When the activity started, what it involves, and the equipment and facilities used | When you began betting this way, your method, and the computers, software and services you use |
| The records you keep | Bet-by-bet records, bookmaker statements and your own ledger |
| A business plan, profit and loss statements, and projected profit and loss | Your plan, your results, and how you expect the betting to make a profit |
| Professional or expert advice you sought | Any accountant or adviser you consulted |
| Qualifications or expertise, memberships and publications you subscribe to | Racing or data expertise, and form or data subscriptions |
| Licences or permits held | Any racing industry licence or registration |
| Time spent each week, and any job or other business | Hours on betting against hours on other work |
Bookmaker records are the raw material. Under the National Consumer Protection Framework, every online wagering provider licensed in Australia sends a monthly statement to active accounts, and its transaction records must stay available for at least 7 years back.
For advice on your own facts, use a registered tax agent. The Tax Practitioners Board's public register shows whether an agent is registered and any conditions or sanctions on their registration, so check it before you engage anyone.
Note: General information about the ATO's ruling and guidance, checked 7 October 2026, not tax advice. The general rules on winnings, prizes and won assets are in tax on gambling winnings in Australia, and the Australian betting laws hub covers the other rules that apply to betting.