GST and Lotto

Forums › Off topic › GST and Lotto

1 | 2 | 3

3352 posts

Uber Geek
+1 received by user: 2843

#3410914 3-Sep-2025 20:44

eracode:

johno1234:

That's an accounting and semantic fallacy. The price of your lotto ticket includes GST so it is collected - the buyer is generally oblivious to this. Your second sentence is correct.

Nope. GST is not collected on the sale of Lotto tickets. I just checked my understanding of all this online and this is what I found:

Relevant law:

Goods and Services Tax Act 1985

The treatment of gambling (including Lotto) is set out in:

Section 5(10) – Gambling supplies.
The supply of a gambling service is treated as the supply of a service by the gambling operator.
Section 10(14) – Value of supply of gambling.
For the purposes of this Act, the value of the supply of a gambling service shall be the total amount paid to the supplier, reduced by the amount of monetary prizes paid out to winners.
What this means in practice

Lotto tickets are a taxable supply — they’re not exempt like banking.
But GST is not levied on the ticket price.
Instead, Lotto NZ accounts for GST only on the “margin” = ticket sales – prizes paid out.

Please tell us if this is incorrect.

The price of the ticket includes GST. The only difference is that the IRD allows gambling payouts to be netted off sales before calculating GST whereas general businesses add up all the GST on inputs and add up all the GST on outputs then net that off. The end result is the same if there are no non taxable inputs or outputs.

The Lotto business pays millions of GST to the IRD. Those millions are collected from ticket sales, nowhere else.

eracode

Smpl Mnmlst
9333 posts

Uber Geek
+1 received by user: 6203

ID Verified

Trusted

Lifetime subscriber

#3410915 3-Sep-2025 20:56

eracode:

johno1234:

ArnoldGoat:

Excellent summary of the position: there is no GST added to the ticket, so nothing to claim.

Again this is incorrect. The price of the ticket includes GST. If the ticket is purchased as part of a taxable activity (unlikely) the purchaser can deduct that GST from his own GST return.

Really - do you have a citation for this?

If GST is payable and collected on ticket sales, how come the GST component of the sale is not disclosed on the ticket - as required by law?

With a physical sale, no receipt is issued - just the ticket. If there was GST involved, a receipt would be required and issued. Same for online sales.

There is no GST charge on a Lotto ticket. In your hypothetical taxable activity situation how could a purchaser possibly deduct the GST portion of their ticket purchase from their own GST return if there’s no GST charged?

Sometimes I just sit and think. Other times I just sit.

johno1234

3352 posts

Uber Geek
+1 received by user: 2843

#3410916 3-Sep-2025 21:07

eracode:

There is no explicit GST charge on a Lotto ticket. In your hypothetical situation how could a purchaser possibly deduct the GST portion of their ticket purchase from their own GST return?

Correct - it is not explicit. But it is none the less a GST inclusive price.

GST can be deducted for small purchases without a GST receipt. For larger sales you would have to ask the retailer for a GST receipt in addition to the ticket. Can any Lotto agent produce such a thing? I doubt it. Unlikely to have ever been tested as in practice there be could be no such a thing as a GST gambling for profit business - it is not legal to construct a business structure purely for the purpose of minimising tax.

eracode

Smpl Mnmlst
9333 posts

Uber Geek
+1 received by user: 6203

ID Verified

Trusted

Lifetime subscriber

#3410922 3-Sep-2025 21:37

johno1234:

The price of the ticket includes GST. The only difference is that the IRD allows gambling payouts to be netted off sales before calculating GST whereas general businesses add up all the GST on inputs and add up all the GST on outputs then net that off. The end result is the same if there are no non taxable inputs or outputs.

The Lotto business pays millions of GST to the IRD. Those millions are collected from ticket sales, nowhere else.

This is ridiculous. You say ‘GST is collected on Lotto ticket sales’ and ‘the price of the ticket includes GST’.

Clearly GST is not ‘collected’ on ticket sales within the generally accepted meaning of that expression. The price of the ticket does not ‘include GST’ in the normal sense of that expression - the price simply and notionally covers the GST that NZLC is required to pay. There’s a difference. The ticket price covers all of NZLC’s costs of doing business and the way their GST is calculated just happens to be one of those costs.

If the ticket price includes GST, there would be a way to determine what the GST charge is - but there’s no way because there’s no GST charged.

’Collection’ of GST implies charging and accumulating the tax then accounting for it to IR in a GST return. That’s not the case here because there’s no collection.

Sometimes I just sit and think. Other times I just sit.

eracode

Smpl Mnmlst
9333 posts

Uber Geek
+1 received by user: 6203

ID Verified

Trusted

Lifetime subscriber

#3410925 3-Sep-2025 21:42

johno1234:

eracode:

There is no explicit GST charge on a Lotto ticket. In your hypothetical situation how could a purchaser possibly deduct the GST portion of their ticket purchase from their own GST return?

Correct - it is not explicit. But it is none the less a GST inclusive price.

GST can be deducted for small purchases without a GST receipt. For larger sales you would have to ask the retailer for a GST receipt in addition to the ticket. Can any Lotto agent produce such a thing? I doubt it.

It’s not a GST inclusive price - it’s a price set to cover NZLC’s business expenses including their GST obligations.

An agent could not produce a GST receipt for a Lotto sale greater than $50 if requested and nor should they be expected to - because there’s no GST charged on Lotto ticket sales. Therefore a GST receipt does not and cannot exist.

Sometimes I just sit and think. Other times I just sit.

johno1234

3352 posts

Uber Geek
+1 received by user: 2843

#3410931 3-Sep-2025 22:07

eracode:

It’s not a GST inclusive price - it’s a price set to cover NZLC’s business expenses including their GST obligations.

An agent could not produce a GST receipt for a Lotto sale greater than $50 if requested and nor should they be expected to - because there’s no GST explicitly charged on Lotto ticket sales. A GST receipt does not and cannot exist.

GST is not an expense - it is a liability or asset depending on input or output GST.

The GST receipt is irrelevant here. It has already been shown that a GST inclusive sale doesn't have to have a GST receipt therefore one does not define the other.

Gambling and Lotto specifically have been identified as non exempt supply of service so is subject to GST. This has also been cited above.

You are wrong and I'm not going to spend any more energy trying to educate you otherwise. Goodbye.

HP

Shop now for HP laptops and other devices (affiliate link).

eracode

Smpl Mnmlst
9333 posts

Uber Geek
+1 received by user: 6203

ID Verified

Trusted

Lifetime subscriber

#3410935 3-Sep-2025 22:26

ArnoldGoat:

Excellent summary of the position: there is no GST added to the ticket, so nothing to claim.

Thanks - in respect of your OP question, that is the situation despite what some people would have you believe.

Sometimes I just sit and think. Other times I just sit.

eracode

Smpl Mnmlst
9333 posts

Uber Geek
+1 received by user: 6203

ID Verified

Trusted

Lifetime subscriber

#3410937 3-Sep-2025 22:58

johno1234:

eracode:

It’s not a GST inclusive price - it’s a price set to cover NZLC’s business expenses including their GST obligations.

An agent could not produce a GST receipt for a Lotto sale greater than $50 if requested and nor should they be expected to - because there’s no GST explicitly charged on Lotto ticket sales. A GST receipt does not and cannot exist.

GST is not an expense - it is a liability or asset depending on input or output GST.

The GST receipt is irrelevant here. It has already been shown that a GST inclusive sale doesn't have to have a GST receipt therefore one does not define the other.

Gambling and Lotto specifically have been identified as non exempt supply of service so is subject to GST. This has also been cited above.

You are wrong and I'm not going to spend any more energy trying to educate you otherwise. Goodbye.

I am not wrong and I don’t need educating on this. In NZLC’s case the GST it pays is effectively an expense of doing business because they can’t separately recover it from customers - unlike most businesses that can add 15% to their sales. NZLC’s margin is reduced by the GST they must pay to IR - just like any other business expense.

This is why their financial statements show GST as part of operating expenses, not just a passthrough of GST like most normal businesses.

With regard to the GST receipt, you queried whether an agent would be able to produce one. When it was pointed out that a GST receipt cannot exist because there’s no GST involved in the sale, you back pedal and now say that the receipt is irrelevant.

I am well aware that Lotto is a non-exempt supply of service and is subject to GST. All I’m saying is that they demonstrably do not collect GST on sales in the way that most businesses do.

Sometimes I just sit and think. Other times I just sit.

Handle9

11925 posts

Uber Geek
+1 received by user: 9676

Trusted

Lifetime subscriber

#3410945 4-Sep-2025 06:20

johno1234:

eracode:

There is no explicit GST charge on a Lotto ticket. In your hypothetical situation how could a purchaser possibly deduct the GST portion of their ticket purchase from their own GST return?

Correct - it is not explicit. But it is none the less a GST inclusive price.

I don't believe this is correct. For this to be a GST inclusive price by definition there also has to be a GST exclusive price and you have to be able to define how much GST you have collected from the transaction. Due to the way gst is calculated for gambling that is impossible to define at sale. It's a tax on a specific type of margin not a revenue based tax like GST is otherwise.

If you lose $115 at the casino you don't lose $100+GST. No one can actually tell you what the GST exclusive prices is as it's not calculated at sale like other sales tax calculations.

In this case GST is much more like income tax than sales tax. It is paid but never explicitly collected as a line item so there is no inclusive or exclusive price. There is just the price.

Handle9

11925 posts

Uber Geek
+1 received by user: 9676

Trusted

Lifetime subscriber

#3410946 4-Sep-2025 06:47

I think the other important point is it impossible to determine the GST component at the point of sale.

The GST value of the transaction is dependent on the outcome of the game - it is calculated in the future once the outcome is known. One lotto draw could have 2% of sales payable as GST, the next may have 4% payable as GST. It’s dependent on the outcome of each game.

It makes me wonder if the “jackpot must be paid out” draws line up with GST periods.

eracode

Smpl Mnmlst
9333 posts

Uber Geek
+1 received by user: 6203

ID Verified

Trusted

Lifetime subscriber

#3410957 4-Sep-2025 08:13

Handle9:

It makes me wonder if the “jackpot must be paid out” draws line up with GST periods.

I believe the 'must pay out' draws only happen when the main prize gets to the maximum allowed by law. This would be on an indeterminate date unrelated to GST periods.

Sometimes I just sit and think. Other times I just sit.

Lego

Shop now for Lego sets and other gifts (affiliate link).

Handle9

11925 posts

Uber Geek
+1 received by user: 9676

Trusted

Lifetime subscriber

#3410962 4-Sep-2025 08:45

eracode:

Handle9:

It makes me wonder if the “jackpot must be paid out” draws line up with GST periods.

I believe the 'must pay out' draws only happen when the main prize gets to the maximum allowed by law. This would be on an indeterminate date.

I have no idea. I find gambling and lotteries boring so don’t pay attention.

snj

305 posts

Ultimate Geek
+1 received by user: 221

#3411022 4-Sep-2025 10:29

johno1234:

eracode:

There is no explicit GST charge on a Lotto ticket. In your hypothetical situation how could a purchaser possibly deduct the GST portion of their ticket purchase from their own GST return?

Correct - it is not explicit. But it is none the less a GST inclusive price.

GST can be deducted for small purchases without a GST receipt. For larger sales you would have to ask the retailer for a GST receipt in addition to the ticket. Can any Lotto agent produce such a thing? I doubt it. Unlikely to have ever been tested as in practice there be could be no such a thing as a GST gambling for profit business - it is not legal to construct a business structure purely for the purpose of minimising tax.

The only case I can think of that would legitimately test "is there GST on Lotto tickets" would be a case of a business bulk buying some Lucky Dips and offering them as part of a promo "Buy a TV and we'll throw in a Lucky Dip for the big draw", but I think a business doing that would have to be worried about other laws (thinking responsible gambling, and the likes) - although I'm questioning that as during the early days of Twitter in NZ, I actually won a Twitter draw from Lotto NZ for some variety of Dip once.

eracode

Smpl Mnmlst
9333 posts

Uber Geek
+1 received by user: 6203

ID Verified

Trusted

Lifetime subscriber

#3411260 4-Sep-2025 15:50

snj:

The only case I can think of that would legitimately test "is there GST on Lotto tickets" would be a case of a business bulk buying some Lucky Dips and offering them as part of a promo …

Understand your thinking but no matter what test might be devised and run, it will never find GST charged because GST is not levied on Lotto tickets under any circumstances.

Sometimes I just sit and think. Other times I just sit.

Qazzy03

545 posts

Ultimate Geek
+1 received by user: 492

#3411275 4-Sep-2025 17:15

This reminds me of the debate if people are on a main benefit pay tax; some people thought it would be crazy MSD to transfer tax to Inland Revenue, and it was all on 'paper'.
Note: MSD does pay tax to IRD for main benefits, NZ Super, and Student Allowance FYI.

So to settle the GST debate, why don't we look at NZ Lotto's reports?

https://assets.mylotto.co.nz/assets/uploads/93c8d0ba-1971-11f0-8cc4-0e63011a1655.pdf

See pages 10,11,21

1 | 2 | 3