Lottery, just like any other games involving luck and chance, has been around for some time. You’ve probably interacted with it by buying lottery tickets and participating in various tournaments. However, many ideas may come when lady luck strikes you. You might wonder whether taxes are inevitable or not. Well, relax because we are addressing this right here.
On your way to a casino, whether online or land-based, you may not think about taxes. However, there is always some tax implications to all gambling activities in Malaysia. Besides, the government has imposed various gambling rules that you must follow to the latter. This also explains why gambling is heavily regulated in most Asian countries. Besides, why else do you think the legal gambling age exists anyway?
Taxation on lottery winnings
Generally, the government of Malaysia, through LHDN, taxes all your income. However, this income has to pass a certain threshold to become taxable. By saying income, we literally mean all earnings, regardless of where you work. Therefore, whether a regular worker, influencer or freelancer, you should pay tax.
However, lottery winnings are an exemption here. In Malaysia, lottery prizes are all yours. The government considers anything you acquire through luck or inheritance windfall, and therefore non-taxable. Besides, there was no guarantee that you will win in the first place. It was luck. Why would someone demand a portion of your luck?
Notably, this exemption extends to rewards won from newspaper, TV, online or any other competitions. This means that if you do athletics, there will be no tax for your winnings in any contest you participate. And if the governments sees it good to gift you a car or house, there won’t be tax for those either.
Reasonably, you might declare these winnings in your income tax for the fear suspicion. However, there is no need declaring them provided that you have concrete proof of the winnings. But for any other income source, make sure to declare them to avoid penalties. Lottery isn’t a loophole to avoid taxes. Therefore, if you are thinking of avoiding tax on your salary, lottery won’t help you commit the crime.
The bottom line
Gambling is fun and entertaining, but with a lot of risks. Besides losing your bet stakes, you may find yourself at logger heads with the government. Usually, failure to pay tax is the main reason for the latter. However, while some gambling activities are taxable in Malaysia, some of them aren’t. Lottery is one of the non-taxable games. Whether you play online or in a location-based lottery rooms, LHDN won’t touch your winnings. You don’t have to include them when filing your tax returns. The money is yours, all yours. However, other gambling activities may be treated differently.