If you win lotto and give some away do you have to pay tax?

Discussion in 'Accounting and Tax' started by Sheryn, 24th Sep, 2009.

  1. Sheryn

    Sheryn Member

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    A fellow workers retired elderly parent won lotto a while ago, just over a million dollars.

    Anyway they purchased a unit as PPOR 400k (lived with one son prior to this)
    Brought a car eg. 30k
    Gave 125K to grandkids
    Giving 300k to 3 kids
    Shouted a holiday for one daughter + some clothes

    The parent is over 65 years of age was not well off before this.

    I believed that years ago if you gave away over 10K (from an inheritance eg will) to someone else you had to pay tax.

    Anyone got an idea if tax has to be paid when giving away lotto winnings?

    Because I am thinking....

    1,300,000 - 400,000, - 30,000 - 125,000 - 300,000 = $ 445,000 to live on.

    445,000 invested at 4.3% = $19,135 which is better than the pension but...


    Thanks
     
  2. Shaneelastic

    Shaneelastic Member

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    No tax, but tehy wont be recieving any government support for 5 years. Silly thing to do with giving the money away. Could of set themself up nicely with say a trust where by they get the income and say the kids get the capital later on.

    Its strange, this always happens when people win lotto.
     
  3. Jase H

    Jase H Member

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    Agreed. Very unfortunate but it smells of the all too common lack of 'finanical intelligence'
     
  4. geoffw

    geoffw Untitled

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    I don't think lotto winnings are taxable.

    But if grandpa hav money to somebody else, that income is possibly taxable to the recipient.

    With that much money he can afford to ask advice and not rely on people like me who don't really know the answer ;-)
     
  5. Spectre

    Spectre Member

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    Dont think there is any gift tax, nor is there tax on inheritances. there can be cgt though on inherted assets.
     
  6. handyandy

    handyandy Member

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    Agree.

    No tax but will impact any government assistance that they may require in the future.

    Cheers
     
  7. rugrat

    rugrat Member

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    It mightn't be what I would do with the money - But I don't think there is anything wrong with what they have done with it. It is a winfall after all, not like it was part of their expectant retirement plan. They wanted to share what they won with those they love - nothing wrong with that. It is nice they want to share.

    Now personally, I am quite a bit selfish :D and would definitely be putting it towards different uses.
     
  8. Shaneelastic

    Shaneelastic Member

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    But if there plan was the age pension they are now up the creek
     
  9. rugrat

    rugrat Member

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    I don't know, I could make 400k stretch 5 yrs, particulary with no mortgage to worry about.
     
  10. Shaneelastic

    Shaneelastic Member

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    They have spent over 850K already, where do you get 400K from
     
    Last edited: 25th Sep, 2009
  11. rugrat

    rugrat Member

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    The first post ;)
     
  12. Shaneelastic

    Shaneelastic Member

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    Okay, Agreed, i didnt read that far down. I just read over 1 Million, not 1.3Mill.

    Anyway they could still have done a lot better planning IMHO
     
  13. marg4000

    marg4000 Member

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    There are no gift taxes.

    This person possibly spent the money in the best way HE/SHE felt appropriate. After all, this person now fully owns a PPOR and car, and has $445K to live on. Centrelink may class the remainder as deprived income, but that only lasts for 5 years. $445K will last well beyond this, and after 5 years the person can go on the pension. He/she will have a much more comfortable retirement even having gifted a large proportion of the windfall.

    Good luck to all of them. Financial considerations aren't the be-all and end-all. Previously this person was living with a son, they sound like a very close family. If I am ever lucky enough to win serious money I would certainly share it around close relatives.
    Marg
     
  14. Dazz

    Dazz Banned

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    ....and by the looks of the wash-up, not that much better after it.




    I don't reckon the 445K is too accurate. I reckon it would be far less than that, once all of the stamps etc on the house were paid, along with the holiday and the clothes.....I assume they weren't free as she apparently "shouted them".


    If that pitiful figure of 4.3% p.a. is what she is earning on her funds from the Banks, then tell her I would happy to assume that role and give her a whopping 5.3% p.a. for the funds.....cos I am way more risky than Banks, so it's only fair I pay a 20% premium.
     
  15. cu@thetop

    cu@thetop Member

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    No Dazz- offer her the lower rate but throw in a free toaster- any higher interest rate will only interfere with her pension entitlements remember.
     
  16. jingo

    jingo Long Term Investor

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    Does anyone know if the Tattslotto agencies provide financial advice for people who do win? Shaneelastic, your idea of a trust sounds like a good idea in this situation.

    Regards Jason.
     
  17. Gools

    Gools Member

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    I won Div.5 last night. Do I go and see a financial advisor or go and blow it all on dinner tonigh? :)
     
  18. Rob Williams

    Rob Williams Festina Lente

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    Spend half on women and booze. Then just go and waste the other half.
     
  19. ianvestor

    ianvestor Future Middleman

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    On food and shelter? :)
     
  20. Rob Williams

    Rob Williams Festina Lente

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    Or more women and booze :D