Give a Gift or lose a Bet???

[Booh]

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[ClubMan]

Instead of me gifting him the money, what is to stop me losing a bet to him for €100k instead. I could lose at Poker or bet him €100k that i can jump 10 feet in the air or whatever. There is no tax due on winnings gambling is there?

Even if that's true (about gambling winnings being tax exempt) the Revenue anti-avoidance rules would most likely cause them to scrutinise this transaction carefully to see if it is artificially structured mainly or solely to avoid tax. In some cases otherwise legal avoidance (as opposed to illegal evasion) may not be acceptable.

 

[xeresod]

Even if that's true (about gambling winnings being tax exempt)

Gambling winnings are exempt here but imagine if they weren't, you could claim your losses!

 

[ClubMan]

Not all gambling winnings are necessarily tax free [broken link removed].

 

[woods]

I think that if the 100K was greater than your friends other sources of income for that year then the revenue could claim that he is a professional gambler and he would have to pay income tax which would be far greater than gift tax.

 

[hjrdee]

I think that if the 100K was greater than your friends other sources of income for that year then the revenue could claim that he is a professional gambler and he would have to pay income tax which would be far greater than gift tax.

On what basis? Using that logic surely the Lotto would be taxed also, as I'm pretty sure that the winnings would be greater the winners other sources of income.

 

[hjrdee]

From:

E-Brief Archive
Revenue e-Brief No. 17/2004

Relating to money involved in Offshore Investigation and Bogus Non Resident Accounts:

Generally, Revenue takes the view that money from gambling wins is at least matched by money lost. Compelling evidence will be required to show that there were winnings in the first place and if there were, that they exceed losses.

​

 

[ClubMan]

Booh - if this is anything other than an idle/academic query (i.e. if you actually plan to put something like this into practice to avoid tax) then you should get independent, professional advice to avoid making any costly mistakes.

 

[Glenbhoy]

Posted by clubman:
Even if that's true (about gambling winnings being tax exempt) the Revenue anti-avoidance rules would most likely cause them to scrutinise this transaction carefully to see if it is artificially structured mainly or solely to avoid tax. In some cases otherwise legal avoidance (as opposed to illegal evasion) may not be acceptable.

From my own knowledge of this and previous discussions on AAM, gambling wins are exempt from tax (verifiable wins), however I have to agree with Clubman here, anti-avoidance rules were enacted in order to see the substance of any transaction and the revenue being all powerful and virtually unchallengeable would seek to apply them here.

 

[Booh]

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[ClubMan]

In relation to Revenue and all of various comments about avoidance, my understanding is that avoidance is legal, but evasion is not legal.

Avoidance is generally legal except in cases where a transaction is deemed by Revenue to be structured mainly or solely to avoid tax and not as a realistic transaction otherwise in which case it is not.

 

[Booh]

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[ClubMan]

But how are you expected to prove that a bet is a genuine bet and not tax avoidance?

Whatever way Revenue require that you do this if appropriate.

Where does the burden of proof lie?

With the individual if Revenue decide that to query the validity of a tax avoidance scheme.

 

[asdfg]

Not all gambling winnings are necessarily tax free [broken link removed].

How was the decision made (11/04/95) before the legislation came into effect (1997)

 

[Ravima]

purely academic:

What about libelling him, then having him sue and you settling the suit?

 

[Glenbhoy]

What about libelling him, then having him sue and you settling the suit?

Nice!!
I know from experience that winning 4 figure amounts does not trigger any tax investigation, (very infrequently), one does however keep a copy of the winning docket (but as most such wins are through accounts with bookies, there is a clearly defined audit trail here, so there's no problem), in addition, payments are normally made directly from the bookie to the bank account, so again the money is traceable.
In Booh's example, i think the following would transpire:
1. There is no guarantee that the revenue would ever know anything about the transaction, however it's likely that the bank's money laundering officer would not accept your explanation and thus alert CAB!! Your account would then be frozen! This is presuming we're talking about your 100k here.
2. CAB don't prosecute but alert the revenue to the transaction, the revenue will apply CAT most likely, but this should be challengeable if you can get as many witnesses as possible to sign sworn affidavits to the effect that the money was won in a genuine bet, not set up for the purposes of gifting 100k to your mate (or vice versa), this will of course be perjury, and the revenue may not accept the explanation anyway, they are notorious for being ________. If you can afford to take a case challenging them, you might win, but you might not. If however you decide to gift your mate 3K per year for the next 33 years, there's nothing they can do. In fact, following on from that, could you give 33 mates 3K each, then each of them could gift 3k to your other mate, which I think may not trigger CAT, although you would end up with the same scenario as previous, ie the revenue would apply anti-avoidance rules and tax your mate anyway.
Remember nothing in life is certain except death and ________.

 

[Booh]

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