GST and Lotto

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ArnoldGoat

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#322597 3-Sep-2025 10:31

Lotto receipts and the associated till receipts do not mention GST. If my business plan involved investment in Lotto tickets (it doesn’t) is it possible to claim GST back? Lotto themselves must be paying GST somewhere for the stuff they buy and are presumably claiming on it. And paying GST on at least some of the ticket price as it’s not all paid out in cash prizes, which are GST exempt.

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#3410680 3-Sep-2025 11:02

Investment in Lotto tickets really?

lachlanw

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#3410691 3-Sep-2025 11:58

I am genuinely interested now, I had assumed Lotto sales were exempt from GST but their accounts specifically show the GST portion on sales, however it's not 15% of any one sales line. Maybe it is net of pay outs?

I am not an accountant, maybe buy a ticket and ask for a GST receipt? Then if your business model is investing in Lotto tickets maybe you can claim it back, however any wins would be subject to income tax I would assume.

johno1234

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#3410708 3-Sep-2025 12:43

There's no exemption so GST will be collected and returned.

ArnoldGoat

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#3410709 3-Sep-2025 12:48

Actually, another organisation I work with does a local lotto. The deal is that the lotto organiser pays GST on ticket receipts, except that the amount of money paid out in cash prizes can be deducted from the ticket sales, so GST is not paid on it. For non-cash prizes, you can claim the GST back on the prize purchased (but not if it was donated), but that part cannot be deducted from the ticket sales.

In our case, it's all cash prizes so GST is easy. But we assume that the ticket buyers are unlikely to be GST registered, so we don't give out GST receipts (or indeed any receipts). It would be mighty difficult to say in general what part of the ticket price has GST on it.

Ref IRD QB 14/13:

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.

And to another respondent, I would not recommend Lotto as an investment opportunity.

johno1234

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#3410717 3-Sep-2025 13:14

Naturally there's a a lot more sales cash in than prizes cash out so there's net GST to be paid to the IRD though.

eracode

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#3410730 3-Sep-2025 14:24

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.

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.

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ArnoldGoat

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#3410817 3-Sep-2025 17:28

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

johno1234

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#3410820 3-Sep-2025 17:49

eracode:

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.

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

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

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.

Whenever you see a "we pay the GST" promotion it is really saying "we are discounting the price by the value of GST on the original price".

johno1234

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#3410825 3-Sep-2025 18:09

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.

eracode

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#3410885 3-Sep-2025 18:57

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.

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Oblivian

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#3410887 3-Sep-2025 18:58

On 3 October 2010, the price per line was raised from $0.50 to $0.60, to cover the cost of the rise in GST from 12.5% to 15%,

Seems it does. Although not on the ticket itself. Perhaps check the print on the reverse. May be some detail.

https://www.stuff.co.nz/dominion-post/news/4235262/Powerball-prices-and-prizes-boosted-in-Lottos-GST-rejig

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eracode

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#3410891 3-Sep-2025 19:09

johno1234:

eracode:

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.

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

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

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 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.

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eracode

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#3410893 3-Sep-2025 19:13

Oblivian:

On 3 October 2010, the price per line was raised from $0.50 to $0.60, to cover the cost of the rise in GST from 12.5% to 15%,

Seems it does. Although not on the ticket itself. Perhaps check the print on the reverse. May be some detail.

https://www.stuff.co.nz/dominion-post/news/4235262/Powerball-prices-and-prizes-boosted-in-Lottos-GST-rejig

That’s the important part. NZLC wanted to cover the increase in GST that they pay - but that’s nothing to do with GST on the ticket sales because there isn’t any.

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lachlanw

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#3410900 3-Sep-2025 19:40

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?

Its not required by law

eracode

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#3410903 3-Sep-2025 19:54

lachlanw:

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?

Its not required by law

I stand corrected - a GST invoice is not mandatory if the sale incl GST is less than $50. Otherwise it is.

Nonetheless I would expect that in the case of a Crown Entity like NZLC, if GST was being collected, a GST invoice would issued regardless of the value of the sale.

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