David Walsh is a professional gambler from Tasmania, Australia. He invested millions of his winnings to find the Museum of Old and New Art (MONA), also located in Tasmania.
The Australian Tax Office (ATO) recently determined that Walsh’s gambling winnings are subject to income tax, retroactively for three years back to 2006, says The Australian.
Walsh approached ATO years ago about his gambling activities and was informed his income was not subject to tax because he was not engaged in a trade or business. In 2010, the ATO changed its mind, and sent Walsh a tax bill for $37.7 million (Australian), plus interest.
Walsh is not your average gambler. He is part of a syndicate that devised sophisticated computer software “to arbitrage global odds and leverage rebates for high-volume wagering.”
Walsh says if the claim isn’t dropped or reversed on appeal, the future of MONA is in jeopardy. He can’t immediately pay up, and MONA apparently has not yet turned profitable.
Perhaps ATO is seizing this opportunity to obtain authority that declares income earned by professional gamblers as taxable. If Walsh loses, he should argue for the ability to deduct gambling losses and associated business expenses as a professional.