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Should prizes from collectively purchased lotteries be de-clared with gift tax?

      The National Taxation Bureau of Taipei, Ministry of Finance (hereinaf-ter referred to as the NTBT)  stated that it had received inquiries from citi-zens regarding whether prizes from collectively purchased public welfare lot-tery tickets should be reported for gift tax purposes.

  The Bureau explained that, in accordance with Paragraph 2 of Article 4 of the Estate and Gift Tax Act, the term “gift” should mean an act where the do-nor offered to transfer his/her property gratuitously to the donee, who then accepted the transfer. As the public welfare lottery increased the lottery win-ning rate, many people collectively purchased lottery tickets to try their luck and then shared the prizes according to their proportion of investment. Such an act is therefore not considered as gifting, and the winners are not required to declare gift tax to the competent tax collection authority of their registra-tion place.

  The NTBT pointed out that people tend to purchase public welfare lot-tery tickets together as a routine activity and there was no need to report it to the NTBT. Before buying the lottery tickets, citizens may fill in a form in writing or online, specifying the name of lottery shop, purchase date, name of the investors and invested amount, and provide documents certifying the payments. All documents shall be photographed and provided to the inves-tors for future reference.  They can also be used as a reference for distributing the prizes and be provided to the NTBT for verification and review in the fu-ture.

  The  NTBT reminded that citizens should pay attention to the use of lot-tery rewards. If there is any circumstance specified in Article 4 of the Estate and Gift Tax Act, when the total value of assets gifted by the donor to others within one year exceeds the gift tax exemption threshold (that is, NTD2.44 million), the donor shall file a gift tax return with the competent tax authority within 30 days after the occurrence of gifting. In the case of having any fur-ther questions related to this taxation, you are welcome to contact the taxa-tion bureau of your household registration.

     (Contact person: Ms. Chen,Section Head of the Individual Income, Estate and Gift Tax Division;Tel: 2311-3711 Ext. 1630)

Last updated:2023-05-22