Do You Need to Pay Tax on Competition Winnings in NZ?
Great news for Kiwi competition enthusiasts - in most cases, your winnings are tax-free!
The Short Answer
According to IRD (Inland Revenue), prizes and competition winnings are generally NOT taxable income for most New Zealanders. However, there are some important exceptions to be aware of.
Why Most Winnings Are Tax-Free in NZ
New Zealand has a relatively simple approach to taxing prizes and winnings:
Prizes Are Windfalls, Not Income
Random competition wins are considered "windfalls" or unexpected gains, not regular income. This means they fall outside the normal income tax rules.
No Capital Gains Tax in NZ
Unlike Australia, New Zealand does not have a comprehensive capital gains tax. This means winning a car, property, or valuable item typically has no tax implications at the time of winning.
Gambling Wins Are Also Tax-Free
Even Lotto wins, TAB winnings, and casino payouts are generally not taxable for recreational gamblers in New Zealand.
When Winnings MAY Be Taxable
While most competition wins are tax-free, there are a few situations where tax may apply:
Professional Competitors
If you enter competitions as a business or profession (e.g., professional gambler, quiz show expert), your winnings may be considered taxable income.
Business Prizes
If your business wins a competition prize related to its trade, this may need to be declared as business income.
Regular Pattern of Winning
If IRD determines you have a regular pattern of entering and winning competitions as an income-generating activity, this could be considered taxable.
Work and Income Considerations
Important: If you receive a Work and Income benefit, competition winnings may affect your payments differently than they affect tax.
Cash Prizes
Significant cash winnings may be considered "income" for benefit purposes and could temporarily affect your payments. Always declare large wins to Work and Income.
Non-Cash Prizes
Physical prizes like cars, electronics, or holidays typically do not affect your benefit, but check with your case manager if unsure.
Small Wins
Small competition wins (gift cards, minor prizes, CompBux rewards) are unlikely to affect your benefit status.
Contact Work and Income on 0800 559 009 if you have questions about how winnings affect your benefit.
What About Gift Cards and CompBux?
Good news for Competitions.co.nz members!
Gift Card Redemptions
Gift cards earned through surveys and activities are considered rewards, not taxable income. Enjoy your $10-$100 gift cards tax-free!
CompBux Points
CompBux are loyalty points with no cash value until redeemed. Points themselves have no tax implications.
Guessing Game Wins
Cash prizes from our daily guessing games are treated as windfall gains and generally not taxable.
Spin and Win Prizes
Whether you win extra spins, CompBux, or cash prizes, these are all treated as random wins - no tax worries!
Best Practice: Keep Records
Even though most winnings are tax-free, it is smart to keep records:
This protects you if IRD ever has questions, and helps with insurance claims if needed.
Disclaimer
This article provides general information only and is not tax advice. Tax rules can change and individual circumstances vary. For specific advice about your situation, please consult a registered tax agent or contact IRD directly on 0800 227 774 or visit ird.govt.nz.
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