Tax on Gambling Winnings

Gambling winnings in South Africa are a peculiar subject. On the one hand, SARS does not tax the winnings of occasional, recreational players. But on the other, rumours of a 15% gambling tax persist, confusing South African casino-goers and sports bettors alike.

Why the 15% rule keeps appearing

Government proposed in the 2011 Budget Review that, with effect from 1 April 2012, all gambling winnings above R25,000, including those from the National Lottery, be subject to a final 15 per cent withholding tax.

The 2011 Budget Speech said the taxation of gambling winnings had come under review and announced that winnings above R25,000 would be subject to a final 15 per cent withholding tax from April 2012.

The 2011 Budget Tax Proposals document repeated that government proposed a final 15 per cent withholding tax on gambling winnings above R25,000 from 1 April 2012.

But the withholding tax was never introduced: in the 2012 Budget government dropped it in favour of a proposed levy on operators' gross gambling revenue, and there is still no withholding tax on gambling winnings in South Africa.

Because articles about the 2011 proposal are still online, the confusion continues.

When a win looks like income

Casual gamblers who land a big win in the next spins or punts do not need to worry. Gamble a bit, win big, and all is well. Winnings from occasional, recreational gambling are not treated as taxable income.

But going into a casino or sportsbook every day and making a profit? That’s a trade, rather than an occasional bet. And trades – including gambling – qualify as income.

In that case SARS can treat the winnings as taxable income, and losses from the trade can be taken into account.

Anyone who gambles as a business needs proper records of wins and losses.

Operators are taxed differently

Licensed operators pay VAT and provincial gambling taxes on their gross gambling revenue. These are the operator's costs, not deductions from a player's winnings.

What the reader should keep

Occasional gambling winnings are not taxed in South Africa, whatever the amount. If gambling is run as a trade, winnings and losses can become taxable income.

When to get tax advice

This is general information, not tax advice. Anyone who gambles regularly as a source of income should get advice from a registered tax practitioner.