This is true. They are not going to take on 99% of punters. Its the professional punters where this is a cause.

In Pats case where he is doing sports arbitrage there is :

1. Very little chance involved. Arbitrage is not trading.
2. His primary income is from arbitrage - (not gambling).
3. He places trades in a systematic way.

There is a very small chance if they wanted to that they could say his activities are not gambling. Gambling implies risk and as Pat has said his method involves very little or no risk.

To back this up there was a tax ruling in 2004 (complex to read and is about the difference in horse race bets vs contracts for difference. But one of the important lines was :


31. One example of where it would be objectively concluded that there was a commercial transaction for the purpose of profit making is where a financial contract for differences was used in an arbitrage transaction. The exploitation of a market imperfection is a commercial transaction and its purpose is to make a profit.

Basically arbitrage trades are taxable.

But Im just saying this as devils advocate. If Pat used different words with the tax office and mentioned arbitrage there is a very good chance the advice offered would be very different.

Saying all this I doubt Pat would get taxed as the ATO has to first work out his profits are being derived from arbitrage betting rather then gambling.

Pat if you are extremely worried about this you can always request a tax ruling for your situation. In this case you would need to tell them exactly what you are doing and how you are doing it. They would then place a binding ruling on your situation which means you are 100% covered.

But for all its worth I wouldn't bother ...