“The only two certainties in this life are death and taxes.”
Benjamin Franklin
It’s a never-ending battle, it seems. There’s tax on your pay, tax on your house, tax on your food and clothes and every other thing you spend money on. And if you’re anything like us, and have been paying attention to the laws around lottery and gambling winnings, you might have an urge to yell: “They may take our salaries, but they will never take our winnings!” If, however, you are not a content-filled online casino gambling review and guide site, you might be interested in finding out how you are taxed on your casino winnings as a gambler in South Africa.
Those of us who enjoy online casinos are actually among the lucky few in South Africa’s long and colourful gambling history. Gambling was heavily restricted across the colonies and the later union, and eventually, the South African Government passed the Gambling Act of 1965, which banned all gambling except betting on horse racing.
For the next 30 or so years, gamblers would be forced to either travel to one of the homelands like Ciskei, Transkei, Venda or Bophuthatswana for their gambling fun, or visit one of the nearly 2000 illegal establishments around the country. However, when South Africa transitioned to a new government in 1994, all gambling bans were lifted and all forms of gambling legalised.
Today, the government licenses casinos and lottery operators, which allows them to properly regulate operations. This is beneficial to both the casino and the gambler, because it offers everyone protection under the law. Among other benefits, for example, legal casinos enjoy insurance cover and protection from criminal activity, while players are protected from fraud and unethical operations.
One thing that illegal casino, gambling or lottery operators don’t particularly concern themselves with is tax. To be fair, this is generally the case with criminal organisations – they’re kind of known for not being taxpayers. One of the crucial differences, at least as far as the government is concerned, is that legal businesses contribute to tax, and illegal ones don’t. Legal operators, therefore, contribute to everything that tax covers: infrastructure, education, healthcare, etc. Illegal operators don’t; they keep all the money.
It also means, at least in theory, that it is possible to tax lottery and gambling winnings. If the government is able to track winners through legally operated casinos and lotteries, then they are potentially able to tax those winnings. But note that we say “in theory” and “potentially”. That’s because, at this writing in June 2021, South Africa does not impose tax on winnings, lottery or gambling, for individuals who play for entertainment
The topic of taxing lottery and gambling winnings has been bouncing around parliament for several years now, and periodically one or another minister will bring it up. However, to date, the SA government has made no real moves to start taxing winners of lotteries and gambling, with one exception: people whose winnings can be considered regular income.
The only people in South Africa who currently pay any kind of tax on their gambling winnings, whether they play online or in person, are professional gamblers. Professional gamblers could be people who play competitively or have sponsorships, or they can be people whose regularity, frequency and style of play can be considered professional. In the latter case, it would mean that your winnings make up the bulk or a significant proportion of your regular income.
In these cases, the taxes involved can be quite complex, and we would highly recommend getting advice from an experienced tax professional if this is you. There is some argument for considering it as capital gains tax, especially for online casinos that are not domiciled in South Africa but are legally allowed to operate here.
Whether you are a professional gambler who pays regular tax, or an individual who doesn’t have to, you still need to indicate these winnings on your tax return. This is partly for your own protection, so that it is on record as non-taxable, and therefore free for you to enjoy. While we understand the temptation to keep your mouth shut about winning a huge progrressive slots jackpot, for instance – and in fact, we encourage it – this doesn’t count for SARS. By law, you are required to disclose winnings even when they are non-taxable.
So, make sure you fill in your returns correctly, don’t spend sleepless nights worried that the taxman cometh for your winnings, and keep enjoying your online casino experience.
