Hypothetical Tax "Situation" (Gambling) Question

Dispondant_See

I know theres probably a simple answer to this that I'm not seeing but..... Just to go through it, you will see what I'm getting at....


AFAIK Gambling and Spread betting (profits/winnings) are Tax Free so... lets number these situations 1-6 to see where the catch is.

1. What happens when me and my buddies play poker and I win the pot of lets say €1,000
I presume all is cool with the rev there should I be so lucky.

2. Me and the aul fella' sit down for a heads on game and the stakes get higher. I even put in my Rolex (true Bond style to cover his raise) I get lucky again on the last pot €10,000 in the green.. happy days... wait do I have to tell the rev about my win?

3. I put up €5,000 on a horse with Paddy Power that I've been tipped a sure thing by my friend who follows the form, it comes in at incredible odds and I walk to the bank with a whopping €100,000 (starting to wish this wasn't hypothetical) Is someone going to ask me some questions when thats lodged?

4. Me and a mate get serious about two opposing point of views and and decide to race each other at mondello with our houses on the line with an official adjudicator to loike adjudicate and a broker that made the bet official on paper..and what do you know I win..I take his house and sell it (paying all appropriate fees) - we are no longer friends but I am in the green!

5. my mother bets me 500,000 that I can't loose 5 stone in 5 months, we get an official broker to take the weight and date and low and behold 5 months later .. I'm a rich man.
Nobody can take anything from me......or ..can they...?

So you get the Idea... basically how far can you actually go with gambling and tax and for that matter how can any one say that the other doesn't "help" the other win.

For the Final example... say for example high stakes poker las vegas heads up with dad and he folds his hand leaving you with a pot pf $1,000,000 which you take home as a cheque on are lingus....

I guess I'm missing something here.... but its a cheque from the Luxor hotel las vegas..pretty undeniable that its from gambling which is still tax free right? ... nobody even knows who I went heads up with.... it could even had been a third party........

Now i know your going to mention something about avoidance but we all do that as much as we can as long as its above board - as far as I can see - its all above board right?

-ok go ahead and burst my bubble now...

Thanks for any information/help in advance...

again its all purely hypothetical - oh how I wish it where real....

Firblog

On the last point I believe you have to pay tax in the states on any winnings in a casino.

ianuss

Hopefully this helps

http://www.taxandlegal.ie/ITRJune2010.pdf

ianuss

Firblog wrote: »

On the last point I believe you have to pay tax in the states on any winnings in a casino.

Even if you're a non-resident?

Bernanke KOs Trichet

If you can get more than €50 on with PP consistently,then you're a losing punter.

Gambling winnings are currently not liable for tax in Ireland but you would have to be able to prove how you attained the income,ie account history from online bookmakers.

If you have regular payments to online bookmakers you will ruin your credit worthiness with those institutions even if you don't have any defaults on loans or cards.

"I won it on the horses" is probably the least credible and amateur tax swerve you will come across,you obviously can't just transfer income from one party to another with phantom bets.

Revenue are far from stupid and unless you can prove through meticulous account and banking records that you're a professional punter (if you're a rare professional punter then you won't be playing in a casino against the house margin),then you will end up with significant interest and penalties.

Dispondant_See

Bernanke KOs Trichet wrote: »

Revenue are far from stupid and unless you can prove through meticulous account and banking records that you're a professional punter (if you're a rare professional punter then you won't be playing in a casino against the house margin),then you will end up with significant interest and penalties.

Thanks for your reply...This stands to reason, and I'm sure your absolutely correct that there would be questions over a certain amount (I wonder how much) However you must agree on a logical level at least that being a "professional punter" is not exactly a pre-requisite to being "lucky". (lotto winners for example, even ones that may have chanced it on the very odd occasion still do win.) So I'm afraid I will have to counter argue that you would need meticulous accounts showing your a professional Gambler of some sort.

Therefore; does not my initial point still stand that with proper proof of a legitimate bet (not phantom) that there then is no legal grounds for penalties. I mean people go to holiday all the time in Las Vegas who never gambled, I'm sure most loose but there are winners.. and some bigger than others.....?? (dunno about the tax in america thing, just took it as example.

For fun.. check out a guy on you tube (not a gambler normally, who put his whole life savings on Red - won and walked back out. I mean it does happen right?

I do get your point-just debating it out a bit - not trying to be a prude. I know they are far from stupid..... but it's still all above board from where I'm standing, no?

Bernanke KOs Trichet

Your posts on having a bet with friends etc would certainly not be allowed and you would end up with significant penalties.

If you had a once off genuine bit of luck,then as long as it was a relatively low original stake and you can show how the initial cash is traced/sourced and a legitimate and reputable company will vouch for and prove the authenticity of the transaction then you should be ok.

If it's a once off scam and not genuine then the trade off is not net positive,you will be highlighting yourself as a wide boy and your business could be subjected to closer scrutiny or a revenue audit.

A continuous level of profit from betting would have to be proved through online accounts,banking records,receipts and even then your business would be put under the microscope.

EDudder

I'd imagine if your mother bet you say €500k that you couldn't lose weight - and you did - Revenue would argue it wasn't legitimate and the transfer was designed to circumvent paying tax. That's a guess though.

I'd love to see that legal case in the papers though.

Dispondant_See

That would be Hilarious, good Idea for a book/Film - surely there is ways of making bets between people official...I thought you could bet on anything like I can walk in to PP and write on a piece of paper that the fly on the wall will turn left and get odds on it...lol

Sounds like a legal mine field I wonder how it would play out within the constraints of the law - surely if you have official documents and evidence then thats all you need.... but I'm probably over simplifying...

barneystinson

Dispondant_See wrote: »

I know theres probably a simple answer to this that I'm not seeing but..... Just to go through it, you will see what I'm getting at....


AFAIK Gambling and Spread betting (profits/winnings) are Tax Free so... lets number these situations 1-6 to see where the catch is.

1. What happens when me and my buddies play poker and I win the pot of lets say €1,000
I presume all is cool with the rev there should I be so lucky.

2. Me and the aul fella' sit down for a heads on game and the stakes get higher. I even put in my Rolex (true Bond style to cover his raise) I get lucky again on the last pot €10,000 in the green.. happy days... wait do I have to tell the rev about my win?

3. I put up €5,000 on a horse with Paddy Power that I've been tipped a sure thing by my friend who follows the form, it comes in at incredible odds and I walk to the bank with a whopping €100,000 (starting to wish this wasn't hypothetical) Is someone going to ask me some questions when thats lodged?

4. Me and a mate get serious about two opposing point of views and and decide to race each other at mondello with our houses on the line with an official adjudicator to loike adjudicate and a broker that made the bet official on paper..and what do you know I win..I take his house and sell it (paying all appropriate fees) - we are no longer friends but I am in the green!

5. my mother bets me 500,000 that I can't loose 5 stone in 5 months, we get an official broker to take the weight and date and low and behold 5 months later .. I'm a rich man.
Nobody can take anything from me......or ..can they...?

So you get the Idea... basically how far can you actually go with gambling and tax and for that matter how can any one say that the other doesn't "help" the other win.

For the Final example... say for example high stakes poker las vegas heads up with dad and he folds his hand leaving you with a pot pf $1,000,000 which you take home as a cheque on are lingus....

I guess I'm missing something here.... but its a cheque from the Luxor hotel las vegas..pretty undeniable that its from gambling which is still tax free right? ... nobody even knows who I went heads up with.... it could even had been a third party........

Now i know your going to mention something about avoidance but we all do that as much as we can as long as its above board - as far as I can see - its all above board right?

-ok go ahead and burst my bubble now...

Thanks for any information/help in advance...

again its all purely hypothetical - oh how I wish it where real....

I'm not sure that the types of bet you've described above would be legal. Of the numbered examples AFAIK only number 3 would actually constitute a legal bet, and you'd want to be able to show your proof of your incredible winner...

In relation to the last one, you'd better check out the US situation firstly, both you and your dad would need to move an awful lot of money to the US and back again.

Bottom line is, if you suddenly came into a lot of money you'd better be able to show where it came from, and a large, one-off, out of character, illegal bet (under the Betting Act 1931 and various other subsequent legislation), involving a wealthy family member, is likely to be challenged.

Bear in mind tax cases are civil matters, so it's a "balance of probabilities", and if you get a huge income tax or CAT assessment, it's up to you to prove that Revenue, on balance of probabilities are wrong.

Now there's a gamble...

Cookie_Monster

Dispondant_See wrote: »

4. Me and a mate get serious about two opposing point of views and and decide to race each other at mondello with our houses on the line with an official adjudicator to loike adjudicate and a broker that made the bet official on paper..and what do you know I win..I take his house and sell it (paying all appropriate fees) - we are no longer friends but I am in the green!

selling the house would be a separate transaction though, would it not? So despite winning it tax free. If you choose to then sell it you will be liable

Firblog

Mate of mine who's a decent poker player spent a day in a casino - not vagas - a few years back; he'd a run of luck at the poker tables - playing sit and go's - winning several hundred dollars, when he went to cash in the chips and couldn't produce a social security number, they kept nearly half the winnings

Still complains about it to this day...

nompere

barneystinson wrote: »

I'm not sure that the types of bet you've described above would be legal. Of the numbered examples AFAIK only number 3 would actually constitute a legal bet, and you'd want to be able to show your proof of your incredible winner...

In relation to the last one, you'd better check out the US situation firstly, both you and your dad would need to move an awful lot of money to the US and back again.

Bottom line is, if you suddenly came into a lot of money you'd better be able to show where it came from, and a large, one-off, out of character, illegal bet (under the Betting Act 1931 and various other subsequent legislation), involving a wealthy family member, is likely to be challenged.

Bear in mind tax cases are civil matters, so it's a "balance of probabilities", and if you get a huge income tax or CAT assessment, it's up to you to prove that Revenue, on balance of probabilities are wrong.

Now there's a gamble...

The legality or otherwise of a bet shouldn't be an issue. Brian Bohan, who has written the most authoritiative book on CAT, is of the view that the legislation still exempts such winnings. I used the word "shouldn't" deliberately, as I do understand the nature of taking tax cases against Revenue.

Beyond that, it is very much the case that the bets must be bona fide gambling, and not set-ups designed to transfer money.

I've been reading these theoretical discussions in textbooks for about 40 years now. Every new generation thinks it has found something different!