GST and Lotto

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eracode

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#3411291 4-Sep-2025 18:19

Qazzy03:

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

@Qazzy03 So what conclusions you have drawn from this info?

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lachlanw

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#3412158 7-Sep-2025 11:39

I think there is only one thing for it. As the tax experts here can't reach consensus we will have to submit a request for ruling to the Revenue

https://www.taxtechnical.ird.govt.nz/apply-for/apply-for-a-ruling/how-to-apply-for-a-ruling

eracode

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#3412222 7-Sep-2025 18:49

Not sure if you’re joking about the tax ruling - rulings are not used for this purpose. The IRD ruling that covers GST on Lotto was issued in 2007.

There is consensus in this thread. The OP asked about GST on Lotto tickets and the situation is very clear and simple - GST is not levied on Lotto tickets.

There was only one dissenting voice - someone who wrongly but repeatedly asserted that GST is collected on tickets then gave up trying to argue their case.

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lachlanw

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#3412256 7-Sep-2025 22:31

Was just stirring a bit to be honest.

@Jono1234 is right, there is GST in the sale price, just the net value they need to pay to the IRD is not determined until the prize pool is paid out. Lotto even reference the fact in the tax note of their accounts, Lottery Duty of 5.5c in the dollar on GST-Inclusive Sales

The easy way to check is take the headline revenue number from the accounts, for 2024 ('000s) I found $1,613,736 then divide the Lottery Duty Paid $96,078 this gives you 5.95%, works for 2023 as well +-5.7%

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#3412258 7-Sep-2025 23:31

lachlanw:

Was just stirring a bit to be honest.

@Jono1234 is right, there is GST in the sale price, just the net value they need to pay to the IRD is not determined until the prize pool is paid out. Lotto even reference the fact in the tax note of their accounts, Lottery Duty of 5.5c in the dollar on GST-Inclusive Sales

The easy way to check is take the headline revenue number from the accounts, for 2024 ('000s) I found $1,613,736 then divide the Lottery Duty Paid $96,078 this gives you 5.95%, works for 2023 as well +-5.7%

So you agree there is no way to calculate the GST component at the point of sale?

eracode

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#3412262 8-Sep-2025 03:00

lachlanw:

Was just stirring a bit to be honest.

@Jono1234 is right, there is GST in the sale price, just the net value they need to pay to the IRD is not determined until the prize pool is paid out. Lotto even reference the fact in the tax note of their accounts, Lottery Duty of 5.5c in the dollar on GST-Inclusive Sales

The easy way to check is take the headline revenue number from the accounts, for 2024 ('000s) I found $1,613,736 then divide the Lottery Duty Paid $96,078 this gives you 5.95%, works for 2023 as well +-5.7%

You’re getting very muddled. GST and Lottery Duty are two different things and Lotto NZ is subject to both and it calculates and pays them separately.

Lottery Duty

Required under the Gaming Duties Act 1971.
5.5% of the face value of all tickets sold.
Paid by LNZ to the government via IRD.
It’s a gambling-specific tax, and it comes off the top of ticket sales.

GST

Lotto tickets themselves are not subject to GST (as per IRD’s 2007 Public Ruling).
However, LNZ still accounts for GST in its operations.
GST is charged at 15% on LNZ’s margin (i.e. the difference between sales and prizes paid out), not on the ticket price.
LNZ pays this GST to IRD, instead of passing on GST collected at the point of sale - because it doesn’t collect GST at point of sale.

This mechanism has been pointed out numerous times above.

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johno1234

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#3412278 8-Sep-2025 08:44

Seeing I have been dragged back into this:

https://www.taxtechnical.ird.govt.nz/-/media/project/ir/tt/pdfs/questions-we-ve-been-asked/2014/qb1413.pdf

Question
1. What are the GST implications of conducting a lottery, raffle, sweepstake or prize
competition?
Answer
2. A person who is GST registered (or is liable to be GST registered) needs to account
for GST on any lottery, raffle, sweepstake or prize competition they conduct. GST
must be calculated on the amount paid by the participants in the lottery, raffle,
sweepstake or prize competition, less the amount of all prizes paid or payable in
money.

GST is collected from the supply of a taxable service - Lotto tickets. That is offset by payments out of prizes in the GST return. By the time as the GST return is completed this is effectively the same as any other GST business. The key difference is that the Lotto business is allowed to consolidate the inputs and outputs rather than capturing GST on individual sales. The end result is the same tax revenue - IRD allowed this special case because of practicality. GST is not printed or accounted for by the ticket, but GST is included in the ticket price. Lotto is not GST free and you can't say that some tickets include GST and some don't. They all do. Whether it is printed or not, and whether you can claim it or not is irrelevant.

People here are confusing GST not printed on the ticket with it not capturing GST. It is, but for purposes of calculating the GST return it is consolidated across the inputs and outputs of the return period.

lachlanw

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#3412279 8-Sep-2025 08:45

I am not muddled at all and am clear now why Jono bailed out of this, I'll probably be the same after this post. You said:

I am well aware that Lotto is a non-exempt supply of service and is subject to GST.
GST is charged on their margin

GST is collected on behalf of, not charged by the Governent. If the provision of service by a GST Registered entity is non-exempt then it is inclusive of GST, it may be at a zero % rate (not saying this is the case, just that the amount of GST is not relevant to it being GST Inclusive or not) but the supply of the service is GST inclusive.

It’s a gambling-specific tax, and it comes off the top of ticket sales.

Off the top of GST Inclusive ticket sales, I referenced their accounts and the problem gambling levy because it is calculated on their GST Inclusive Supply of Sales. If the amount paid of Levies is 5% of their total sales, then it is pretty clear that the supply of those sales (ie Lotto Tickets etc) is GST inclusive.

Lotto tickets themselves are not subject to GST (as per IRD’s 2007 Public Ruling)

This public ruling only applied 2007 to 2012.

(Edit: tidy up of language)

eracode

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#3412774 9-Sep-2025 07:41

The OP simply asked whether there are any circumstances where GST could be claimed back on Lotto tickets.

The correct answer is no - because there’s no GST collected or paid when you buy a Lotto ticket. So regardless of your business model, there’s no GST that can be claimed back because there's no GST levied on the ticket price.

However Lotto NZ does pay GST on total ticket sales minus total prizes amount paid out.

The GST is paid by Lotto NZ as part of its operating expenses, not added on top of the ticket price.

This was posted way back here.

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johno1234

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#3412776 9-Sep-2025 07:51

GST is not an operating expense and has nothing to do with profit and loss. It is an asset or liability depending on direction.

This is fundamental accounting 101.

lachlanw

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#3412833 9-Sep-2025 10:24

I'm out

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eracode

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#3412952 9-Sep-2025 12:40

johno1234:

GST is not an operating expense and has nothing to do with profit and loss. It is an asset or liability depending on direction.

This is fundamental accounting 101.

I passed Accounting 101 in 1970 as part of my Uni accounting degree and was a member of NZICA for 35 years.

In a normal trading operation, yes - GST is not an operating expense - it has nothing to do with profit and loss and is a pass-through item in the balance sheet. However LNZ is a special case and has different GST rules to almost all other taxpayers. It does not pass GST through because it doesn't collect it - it just pays it directly as a business cost.

The Balance Sheet of LNZ makes no reference to GST at all.

In the Income Statement, the effect of GST reduces LNZ’s reported “profit before distributions”. In practice, even though it’s a statutory obligation, LNZ treats GST in the same way that it treats rent, salaries, electricity, and Lottery Duty — as a cost of doing business that reduces the distributable surplus returned to the government or paid out to the community.

GST is ‘included’ in the ticket price only in the general sense that the price is set to cover LNZ’s GST obligations - in the same way that the ticket price covers LNZ’s other costs of doing business. GST is a business expense for LNZ and that’s effectively how it’s treated in their financial statements.

Lottery Duty is also a statutory cost of LNZ doing business. Their GST is not classed any differently to the duty - even though the duty is levied on ticket sales and GST is levied on margin.

All this is an interesting academic debate but it does not have any effect on the correct answer to the OP’s original query.

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acetone

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#3412955 9-Sep-2025 12:52

eracode:

GST is included in the ticket price only in the general sense that the price is set to cover LNZ’s GST obligations - in the same way that the ticket price covers LNZ’s other costs of doing business. GST is a business expense for LNZ and that’s effectively how it’s treated in their financial statements.

This has been an interesting thread to follow. For my simplistic view on this, as you stated above, GST is included in the ticket price and that is how LNZ "collects" GST from ticket sales in order to pay that GST on to the government (Yes minus payout figures etc).
Then how is that statement different to what the other people have been saying?

eracode

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#3412966 9-Sep-2025 13:56

acetone:

eracode:

GST is ‘included’ in the ticket price only in the general sense that the price is set to cover LNZ’s GST obligations - in the same way that the ticket price covers LNZ’s other costs of doing business. GST is a business expense for LNZ and that’s effectively how it’s treated in their financial statements.

This has been an interesting thread to follow. For my simplistic view on this, as you stated above, GST is included in the ticket price and that is how LNZ "collects" GST from ticket sales in order to pay that GST on to the government (Yes minus payout figures etc).
Then how is that statement different to what the other people have been saying?

See above. GST is not levied on Lotto tickets - but it is covered by the ticket price, like other LNZ business costs. It is not 'included' or 'collected' in the generally-accepted sense of how those expressions are used in respect of GST. It is not accumulated and passed on to IRD like GST collected by normal trading operations. LNZ calculates the GST it owes based on its margin and pays it directly to IRD. The difference is in the meanings of 'collected' v 'covered'.

This is very different to comments by @johno1234 who said (quote):

"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."

and

"For larger sales you would have to ask the retailer for a GST receipt in addition to the ticket."

Those statements are totally incorrect. There is no GST levied so there can be no GST receipt. Similarly there can be no GST to deduct from a hypothetical ticket purchaser's GST return.

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lachlanw

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#3414043 12-Sep-2025 10:27

Like a sore tooth I keep coming back to this thread, I thought for shits and giggles I would approach the CFO of Lotto on LinkedIn and ask them to settle this for us, then found that one of my former colleagues went on the become FC of Lotto, so I reached out to them framing the debate and asking for their view, their response was:

So, there is indeed GST on the face price of a ticket for all Lotto games.

The 15% GST applies on net ticket sales, less an amount put aside for prizes paid out. The prize amount is based on a legislated % set aside for each game, not the actual prize paid to a person after a draw. Like a bank is required to have cash reserves, Lotto has to set aside a reserve amount to fund all prizes payable at 100% win rate (which theoretically will never happen at the same time).

Eg of the $10 paid for a ticket, less prize reserves of say $3 = $7 sale price is what 15% Gst is calculated on.

The end customer can never claim GST back on a Lotto ticket they've purchased as the GST doesn't apply on the full price.

In addition Lotto doesn't sell tickets to a business. Its not legal to buy or trade Lotto tickets so you couldn't really claim GST on your purchase even if you could accurately calculate the GST (which you can't as the prize payable amount is variable).

So in response to the opening post there is an amount of GST on the charged on the ticket sale but you cannot claim it.

*Disclaimer: this does not constitute advice or the views of Lotto or the person who provided it, and is purely for the purpose of debate of hypotheticals.

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