There seems to be a great deal of confusion when it comes to Tax on lottery winnings in South Africa. We’re going to set the record straight to clear things up, so that you don’t need to be confused when you hit the big jackpot!
Tax on lottery winnings in South Africa
The short answer is no, lotto, cash winnings, prizes and the sale of these type of tickets are not subject to tax in South Africa if they are conducted or authorized within the laws of South Africa. The Lotto is licensed by the government and is essentially tax free. However if you were to win the lotto a few times and it becomes your primary source of income then you might be paying tax at some point. Our gambling tax article covers this nicely so give that a look if you are winning on a regular basis.
Declare lotto winnings to SARS
While there may not be a tax on your windfall you should do the safe thing and still report it to SARS. As mentioned winnings are excluded from capital gains tax (CGT). However, the individual would need to declare the winnings to the South African Revenue Service so that they know where that lump sum that hit your bank account came from. Moneyweb have an interesting article detailing this. the best thing to do is report the winnings to avoid any headaches further down the line, especially when it’s time to submit income tax.
What about the rest of the world, do they pay a tax on lotto winnings?
It varies from country to country and one of biggest mistakes people make is to apply the USA’s lotto tax rules on South Africa. We consume ton’s of USA TV shows and news so it’s a common mistake to think that tax on lottery winnings in South Africa is a thing. In the USA you get the option of either having your winnings paid out in a lump sum that is taxed depending on the state. Or having monthly payments made to you for the next 29 years that are tax free.
I’ve won the lotto but I’m unsure what to do about my tax
If you’ve hit the big one the first thing you should do is contact a tax attorney. We’re sure you would be able to afford this with your newly acquired millions! They’ll be able to put your mind at ease and explain what you should do going forward. They are the experts after all!
Gambling winnings such as lottery, casino winnings or sports betting etc.
If you are like most of the gambling population (i.e. you have a day job and only gamble every now and again for fun) then your winnings won’t be taxable, but you should still declare to SARS as non-taxable income. However, if you are a full time ‘professional’ gambler who has no other job and your sole source of income is to make money off bookies or casinos, then SARS will deem this activity to be a profit making scheme and you would need to declare your winnings (and losses) and they will be subject to normal tax. TaxTim.
We hope you enjoyed our Tax on lottery winnings in South Africa post, if you have any questions or feedback then let us know in the comments below. If you’d like to know about some of the bookmakers where you can take actual lotto bets then check this article out, it lists bookmakers in South Africa who offer betting on the lottery as well as a wide variety of other sports and events.
Get Legal Advice
At the end of the day it’s important to speak to a tax attorney or a lawyer should you hit the big one. Yes there will be fees to pay but you’ll get the most up to date legal advice regarding taxation on your winnings. It’s always best to speak to a professional as the laws do change from time to time.
We’ve listed the contact details of several tax attorneys and accountants below, should the need arise. It’s worth firing off an email with a question if you have one, as most law firms will be happy to give some quick advice. If there is anything you’d like to know then also feel welcome to leave us a comment below.
From wich amount must you declare sportsbetting lotto winnings to sars?
This is a great news for lottery players, I won The U.S powerball Twice and all my friends whom I have told about my secret to winning has won once or more as well.
If you win the lotto do you get the option of choosing lump sum or annual check in South Africa??
What happens if you win a foreign lotto like USA MEGA MILLION. What percentage is SARS going to take?
Good question! If it’s an insured jackpot I don’t think they’ll get any, but winning overseas and bringing the money back could be a little sticky. We’ll look into it!
What this article posted Wednesday, February 23, 2011
https://www.sanews.gov.za/south-africa/gambling-winnings-be-taxed-15
“Cape Town – Those who rake in gambling winnings of over R25 000, including payouts from the National Lottery, will from next year have to pay a 15 percent withholding tax, the Minister of Finance Pravin Gordhan announced in his Budget Speech on Wednesday. “
“In terms of paragraph 60 to the eighth schedule of the Income Tax Act, a taxpayer who is a natural person (i.e. excluding inter alia juristic persons such as companies) must disregard any gain or loss in respect of a disposal relating to any form of gambling, gaming or competition, where such gambling, game or competition is authorised by, and conducted in terms of, the laws of South Africa.
“In effect therefore, any gain derived from an authorised gambling activity, realised by a taxpayer who is a natural person, will be disregarded for income tax purposes,” the ENSafrica department said in a statement.
https://www.news24.com/SouthAfrica/News/tax-man-stalks-cash-gifts-from-record-powerball-winner-20190226
If you’re a casual gambler you aren’t subject to tax. Professional gamblers are subject to tax though.
Hello
Is financial spread betting taxable in South Africa?
Hi Erica,
To our understanding financial spread betting is taxable in the same way investments are. But it’s best to check with a tax expert to be sure.
Hi. How much tax do you pay when you are a south african citizen, but it is an overseas lottery winning?
Hi Chantel,
That depends on where the lotto ticket was struck. If you bought a lotto in the USA you’d be subject to US tax laws. However if you used a betting site and won the US lotto it’d be tax free fixed odds winnings. Hope this helps.
You don’t pay tax on lottery wins in South Africa, people think you do but that’s because you always here about USA lottery winners. They pay tax in the USA but not here, ask the national lottery.
Are lottery pools legal in South Africa? And if so are the winnings tax free for all members of the pool?
Can foreigners play SA lotto
Yes foreigners are welcome to play the lotto, although if you win you’ll need a South African Bank account
My question, please, is what if a South African citizen hits a jackpot in the US, for example, (I understand that they tax up to +-39%), now back here at home, is that winner not going to be taxed or the laws only apply to South African national lotteries?
You’d be taxed on the US side on the winnings. Then once you’d transfer the funds to SA you’d pay tax on that. So you’d be hit hard tax wise. If you were to win the lotto you would rather keep the winnings in the states and bring in R1 million a year to SA which would be tax free. Hope this helps 🙂
Yes!
I am curious. I have not won any large sums of money but as someone who occasionally plays lotteries on Lottostar the possibility is there. I don’t plan on doing this as a career though. What I want to know is, if I am to donate a large sum of money to friends and relatives, will this gifts be taxable and push them into another tax bracket? I don’t want to do more harm than good.