Taxation of Casino Winnings and Withdrawals in New Zealand

People who love to gamble usually daydream about how they will spend their winnings. Those who bet on sports carefully select matches and betting options to create a realistic slip. Those who play casino games work on their strategy for blackjack and poker. If they play slots, they are looking for free spins or these bonuses with low deposit requirements to get as many chances as possible. However, using a bonus might require you to give up a portion of your winnings or to satisfy the playthrough terms before making a withdrawal. This doesn’t always feel good, just like paying taxes on your winning doesn’t feel good.

Here we are going to talk about the tax laws in New Zealand. More specifically, we will discuss how tax law applies to winnings and withdrawals from a casino. Of course, if you want to win in the first place, you need to pick a legitimate operator. To help with your decision-making process, you should consult the list of operators reviewed by Wagering Advisors NZ, as they only include licensed sites. So, let’s see what the rules are for winning money at both online and offline casinos in New Zealand.

Laws Around Gambling in New Zealand

The Department of Internal Affairs is a gambling regulatory body in New Zealand. Depending on the prize pool, not all gambling activity requires a license. So, some forms can be conducted even by individuals. DIA recognizes 4 different classes of gambling activities:

● Class 1 - Prize or turnover cannot exceed 500 NZD. It can be conducted by individuals and doesn’t require a license.

● Class 2 - The prize must be between 500 NZD and 5000 NZD. The potential turnover cannot exceed 25000 NZD. It cannot be conducted by individuals, but it doesn’t require a license.

● Class 3 and 4 - The prize total value for Class 3 gambling must exceed 5000 NZD. Class 4 gambling also uses machines where people play. Both of these can only be hosted by licensed institutions.

Casinos obviously fall under classes 3 and 4, and in some countries, like the US, people need to pay taxes on their casino winnings. This was also the case in New Zealand up until recently.

Taxation on Casino Winnings; Taxes on Online Gambling

Up until recently, winnings from casinos or sports betting were taxable. Kiwis had to pay 29% of their winnings as tax. This changed in 2021, and now you pay 0 taxes on all winnings acquired through gambling. The only exception are professional gamblers because their winnings are regarded as income, and losses are regarded as business expenses, so they can write them off.

Income tax is charged based on revenue, and it has 4 income brackets:

• For each dollar of income up to 14,000 NZD - You pay 10.5% income tax
• For each dollar of income from 14,000 to 48,000NZD - You pay 17.5% income tax
• For each dollar of income from 48,000 NZD to 70,000 NZD - You pay 30% income tax
• For each dollar of income from 70,000 NZD to 180,000 NZD - You pay 33% income tax

Any income that exceeds 180,000 NZD is taxed at 39%.

However, even if you aren’t taxed, you still need to report your winnings in certain situations. If you are receiving state support like accommodation, temporary support (basic living expenses), or special benefits (low-income citizens, disabled citizens), then you need to report winnings.

When you think about it, this makes sense. After all, the gambling rewards aren’t necessarily cash prizes. Let’s say you win a trip to Perth Australia, and meaning you'll be away from home for a few days. The government would need to know how you managed to afford it because they are helping you due to your current financial situation.

Taxation of Casino Withdrawals

As stated, players don’t pay any taxes on their winnings. The law applies to those who won at either a land-based or an online casino. Withdrawals usually occur when you are playing online, and those payments are digital and visible on the statement. In other words, it’s easy to justify those funds as casino winnings. The amount of money in your casino account can only change due to winning or losing, so any withdrawals are viewed as gains from gambling, and you don’t pay taxes on them.

It’s also worth pointing out that you don’t pay any taxes on gambling at off-shore online casinos. Of course, if you gamble in a foreign country like the US, they automatically tax your winnings, and there is a whole process on how to be exempt from this tax if you are a foreign citizen.

Conclusion

To sum up, Kiwis can play casino games, bet on sports, or play the lottery either online or in land-based establishments. If someone ends up winning, they don’t pay taxes for the prize money. This tax-free approach ensures that players can fully enjoy their winnings without any financial burdens.