Question:
How are winnings from a foreign lottery taxed? Is there a tax on casino winnings?

Answer:
Sorry to burst your bubble, but my guess is that you have been contacted by a European lotto company saying you have won this money. There are hundreds of scams like this, the so called ‘419 scams’ or ‘forward payment scams’.

The con artists tell you that you have won this money and ask you to contact them. After a few official looking documents are sent to you they will request a payment from you to cover administrative costs of some sort. This amount can vary from R10 000 to R50 000. If you oblige and make the transfer you will never hear from them again.

If you type ‘lotto scam’ into Google you will be shocked to see the extent of the ruse.

If you have indeed won the money legitimately they would not ask for a fee. If this is the case and you are indeed in the proverbial pound seats you have another problem. It is illegal to play foreign lotteries from South Africa and the money could be confiscated if the authorities find out. An investment advisor would be obliged to report your winnings to the South African Revenue Service (SARS) and they would most definitely investigate you.

Your first step is to get information on the lotto company and make sure they are legitimate. If you did not buy a ticket there is no way you can be a legitimate winner. If someone bought a ticket for you overseas then the safest bet would be to see a legal advisor specialising in offshore investment.

Casino winnings are not taxable as long as you are not deemed a professional investor.