Do you pay tax on lottery winnings in Australia?
No. Australian lottery winnings are not subject to income tax. The ATO treats them as a windfall gain, not income, so they do not appear on your tax return. The full advertised jackpot is what you receive. However, money earned from investing or depositing the winnings is taxable — and there are Centrelink and superannuation considerations for large wins.
The short answer
Lottery winnings in Australia are not taxed. You keep every dollar of the prize. Any interest or investment income you earn from the money afterwards is taxable as normal income.
What you need to know
Lottery winnings are not taxed
The Australian Taxation Office (ATO) does not classify lottery winnings as assessable income. They are treated as a windfall gain — an unexpected receipt — and are therefore not subject to income tax or capital gains tax at the point of winning.
Interest on winnings is taxable
Once the winnings are deposited in a bank account, any interest earned on that money is assessable income and must be declared on your tax return. This applies to any investment returns — shares, property income, or term deposit interest — generated from the winnings.
Professional gamblers are treated differently
If you derive your income from gambling as a business or profession, the ATO may treat winnings as ordinary income. This is rare and does not apply to recreational lottery players. The ATO considers factors such as regularity, system, and intent when making this determination.
Superannuation contributions
You can contribute lottery winnings to your superannuation account, but standard contribution caps apply. Non-concessional (after-tax) contributions are currently capped at $120,000 per year (or $360,000 using the bring-forward rule). A financial adviser can help structure large amounts efficiently.
Gifting money to family
If you give money to family or friends after a lottery win, there is no gift tax in Australia. The recipient does not pay tax on the gift itself. However, any income they earn from investing the gift (interest, rent, dividends) is assessable in their own hands.
Centrelink and social security
A large lottery win may affect your Centrelink entitlements. Lottery winnings are an "exempt lump sum" under the Social Security Act — they are not assessed as income, but the assets test does apply. This means the money, once received, counts as an asset and may reduce your payment. See the Outnumber guide on lottery winnings and Centrelink for the full picture.
Lottery winnings and Centrelink
If you receive Centrelink payments, a lottery win does not count as income — but it does count as an asset. Depending on the size of the win and your payment type, this may affect your entitlements. The Outnumber Centrelink guide explains how the income and asset tests apply and what to expect.
Read the Centrelink guideFrequently asked questions
Do you pay tax on lottery winnings in Australia?
No. The ATO does not treat lottery winnings as assessable income. Whether you win $100 or $200 million, the winnings themselves are not subject to income tax or capital gains tax. They are treated as a windfall gain.
Do I need to declare lottery winnings on my tax return?
No. The lottery winnings themselves do not go on your tax return. However, any income earned from investing or depositing the winnings — such as bank interest, rental income, or share dividends — is assessable income and must be declared.
Is the Powerball jackpot taxed in Australia?
No. The Powerball jackpot, like all Australian lottery jackpots, is not subject to income tax. The full advertised amount is what the winner receives, minus any applicable Centrelink asset test adjustments if relevant.
What happens if I put my lottery winnings in the bank?
The principal amount is not taxed. Any interest the bank pays you on that money is assessable income and must be declared on your tax return in the year it is earned.
Can I give lottery winnings to my family tax-free?
Yes. Australia has no gift tax. You can give any amount to family or friends without either party paying tax on the transfer. The recipient will pay tax on any income they earn from investing the gift, but not on the gift itself.
Does a lottery win affect my Centrelink payments?
Yes, potentially. Lottery winnings are exempt as income under the Social Security Act, but once received they count as an asset. If your total assets exceed the applicable asset limit for your payment type, your payment may reduce or cease. The Centrelink income and asset tests apply to your ongoing financial position, not just the win itself.
Do I need a financial adviser after a large lottery win?
It is strongly recommended. While the winnings are not taxed, structuring a large sum — superannuation contributions, investment portfolio, estate planning — involves decisions that can have significant tax and financial implications. Outnumber is not a financial adviser and this page is general information only.
Related guides
This page is general information only and does not constitute financial, tax, or legal advice. Tax laws change — verify current rules with the ATO or a qualified adviser. For entertainment purposes only. Play responsibly. 18+. Gambling Help Online: 1800 858 858.