professional gambling, page-5

In general the ATO does not want to accept income from gambling because it does not want to allow a deduction for losses.

As already pointed out it is a grey area.

Refer:

The courts have been rather reluctant to find a business of betting. In Brajkovich v FCT 89 ATC 5227 at 5234, the Full Federal Court stated that 'the gambler who seeks to demonstrate that he is ... a businessman has more to show by way of system and profit motive than those who engage in more conventionally "commercial" activities'. The Commissioner of Taxation has also stated in an income tax ruling[21] that although it is possible for a mere punter to be carrying on a business of betting, it will be rare for a taxpayer with no connection with racing other than betting to be carrying on a business of betting.


The principle criteria for determining whether there is a business of gambling were laid down in Brajkovich at 5233:


- 'whether the betting is conducted in a systematic, organised and "businesslike" way'; - 'its scale: i.e. the size of the wins and losses' -'whether the betting is related to, or part of, other activities of a businesslike character, e.g. breeding horses'; - 'whether the bettor appears to engage in his activity 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'; - 'whether the gambling activity ... is of a kind which is ordinarily thought of as a hobby or pastime'.


Evidence of a systematic operation includes using a computer as a data base for form guides or to calculate odds; formulating a plan to obtain the best odds; taking steps to lessen the element of chance, maintaining a fund of capital with which to bet; and maintaining adequate daily and weekly records of the taxpayer's position.


The Commissioner of Taxation recommends that the factors considered in Brajkovich, Evans and Babka v FCT 89 ATC 4963 be taken into account in determining whether a business of gambling exists. Where the courts find that there is a business of gambling because of a profit motive, a systematic operation or other similar factors, any gambling losses would become deductible under s 51(1) of the ITAA.

http://www.murdoch.edu.au/elaw/issues/v2n2/kee222.html