Tax on Winnings of Game Shows And Lottery

By Dave Nyam •  Updated: 01/23/24 •  5 min read

Striking it lucky on a game show or hitting the jackpot in a lottery can be a game-changer. Suddenly, you’re flush with cash that can be used in countless ways. But here’s the kicker – many folks aren’t clued up about the tax side of things. They might be taken aback by how much they have to fork over to the South African Revenue Service (SARS). This article will shed light on the tax rules for game shows and lottery winnings

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in South Africa. We’ll delve into how much tax is slapped on lottery winnings, whether online gambling platforms like Betway are taxable, and the slice of Lotto winnings that SARS takes.

Game Shows And Lottery Winnings Tax

So, you’ve struck it lucky on a game show or hit the jackpot in a lottery in South Africa. What’s next? Well, there are two kinds of winnings to weigh for tax reasons: cash winnings & non-cash winnings.

Cash winnings are just that – cash! This includes prizes from lotteries, game shows, or gambling. They’re not taxed as income unless they’re from a business or a scheme. Instead, they’re taxed as donations. The donor pays 20% on the donation up to R30 million and 25% on anything above that. But hold on, some gifts are tax-free, like those to family or charity.

Non-cash winnings are a different ball game. These could be goods, services, vouchers, awards, etc. They’re taxed as income unless they’re exempt. The value of these winnings is the market or face value when received or due. This value is added to the winner’s income and taxed at the normal rate, ranging from 18% to 45% for individuals, 28% for companies, and 45% for other trusts. But remember, some winnings aren’t taxed, like personal assets, retirement benefits, long-term insurance, compensation, gambling, games, competitions, awards, education, etc.

How much is the tax on lottery winnings in South Africa?

Lottery winnings are money winnings not taxed as income in South Africa unless they are from a business or a scheme. But they are taxed as donations, a tax on giving away property or rights for free. The giver pays 20% on the donation up to R30 million and 25% on the rest. But some gifts are tax-free, such as to family or charity.

For example, if you win R100 million in the lottery and give R50 million to your spouse and R10 million to a charity, the donations tax is:

DonationTax rateTax
1 – 30 000 00020%6 000 000
30 000 001 – 40 000 00025%2 500 000
Total 8 500 000

So you get R31.5 million after giving R60 million and paying R8.5 million in tax.

Do you pay tax on Betway?

Betway is a website for online gambling, with options like sports, casino, live casino, and esports. It has a license from the Western Cape Gambling and Racing Board and follows the South African gambling laws of 2004.

In South Africa, gambling winnings are tax-free unless they come from a business or trade. However, the gambling operator must pay 15% of the winnings over R25 000 to SARS as withholding tax. The winner does not need to report or pay anything else.

For instance, if someone wins R50 000 from a R10 000 bet on Betway, they will get R46 250 after a withholding tax of R3 750.

What percentage does SARS take from Lotto winnings?

Hitting the jackpot in a Lotto can be a thrilling experience! In South Africa, these winnings are seen as capital, so they’re not subject to income tax unless they come from a profit-making scheme or trade. But here’s the twist – they are subject to donations tax. This is a tariff on the price of any property or right offered away freely. The guy offering the donation discharges this tax at a rate of 20 percent on the price of the donation, up to R30 million, and 25 percent on anything above that. But don’t worry, there are some exemptions and deductions that might let you gift money to a family member or a public benefit organisation tax-free.

So, how much does SARS take from Lotto winnings? Well, it depends on the amount of the winnings and the amount and recipient of any donation. If the winner doesn’t donate, SARS doesn’t take a cut. SARS also doesn’t take a cut if the winner donates to their spouse or a public benefit organization. But if the winner donates to anyone else, SARS takes 20% of the donation value, up to R30 million, and 25% of anything above that, after deducting the annual exemption of R100,000.

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