Lotto syndicate tax implications...

Hi,

Here's an interesting one. I run a lotto syndicate in work (9 in total). I hold the tickets etc.. if we have a big win and I divide out the winnings equally are the other members liable to gift tax (as technically I bought and hold the winning tickets)?

How would I avoid this? Would we need to have a contract signed up?

Thanks!!

Greg.

Yes, you should have a contract. There have been court cases in the past about lotto syndicates winning and disagreeing about the split of the money.
You really dont want to lose friends over a lotto win, or have an unforeseen tax liability.

aren't lotto winnings tax free? I agree you should really have a contract in place to cover yourself/the syndicte (eg missed payments, people leaving etc), but aren't you buying the ticket on behalf of the syndicate so if you're lucky enough to win, any claim would be made by/on behalf of the syndicate & not by you as an individual?

If/when you collect your winnings, everyones name goes on the win, not just the holder of the tickets...

The best method I found so far is from a previous jackpot winning syndicate and I believe it worked extremely well for them.
There was a short contract detailing how payments would be collected, what happened in the case of arrears and an equal split of the winnings. It also detailed how the tickets were bought, records kept etc. The syndicate signatures were all placed on this contract.
A treasurer was nominated, and it was up to them to buy the tickets on a monthly basis and collect money. When the tickets were bought, another member of the syndicate (in rotation) checked the tickets with the treasurer. The tickets were then copied for each member of the syndicate and handed out to them.
A member of the syndicate in rotation checked the tickets on a Sat & Wed evening, they then initiated a call-chain if there were significant winnings to be shared. Highly efficient imho, and really came into play when they did fortunately win the jackpot.
I believe that all lotto winnings are tax free, even when in a syndicate.

Lotto winnings are tax free.

However, if one person in the syndicate collects the cheque, lodges it in his bank account, and writes cheques to the members of the syndicate, the transfer will be subject to Capital Acquisitions Tax, subject to the tax free thresholds.

If each member of the syndicate presents at lotto HQ and signs the back of the winning ticket, the Lotto will issue individual cheques, and there will be no tax payable by the syndicate members.

Slash said:

However, if one person in the syndicate collects the cheque, lodges it in his bank account, and writes cheques to the members of the syndicate, the transfer will be subject to Capital Acquisitions Tax, subject to the tax free thresholds.

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Have you any evidence to support this contention? I suspect you are badly mistaken. I could not imagine Revenue winning a court case to enforce a CAT assessment in such circumstances, or even bothering to raise such an assessment in the first instance.

I think Ubiquitous is right here. There have been numerous syndicates wins in the past and if Revenue had shown an interest in even one, I'm sure we would have read about it!

Slightly off topic, but relevant I think....We are a family of four and buy the Euromillions together every couple of weeks. Basically we throw change in a jar and when it reaches 10 euro, we buy a ticket. Would we be considered a syndicate if we were fortunate enough to win?

Yes you would be considered a syndicate..you would want to be surely? Everyones name should go on the win.

I think Slash is correct..In that scenario where only one member collected the cheque, he/she is the registered winner and anyone else who benefits from could be liable...

The lottery team provide advice and guidance to winners in this regard where required so that syndicate winners understand the implications of having/not having their name on the winning ticket..

Lauren said:

I think Slash is correct..In that scenario where only one member collected the cheque, he/she is the registered winner and anyone else who benefits from could be liable...

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Again, have you any evidence to support this view? If so, please enlighten us. Otherwise there is a risk that people in syndicates might worry unnecessarily about this matter.

In almost 20 years as an accountant (which coincides largely with the 21- or 22-year history of the national lottery) I have never heard of any case of syndicate members being subjected to CAT on the distribution of their winnings.