Income from Lottery Winnings
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Lottery Winnings
Lump Sum Lottery Winnings
Lottery winnings that are paid as a single lump sum amount are NOT treated as income under the VEA and are considered an exempt lump sum.
The initial exemption of the lump sum amount from the income test does NOT mean that any on-going income generated by the lump sum is exempt, nor does it mean that the asset the lump sum turns into is exempt. The continuing assets and income tests treatment will be determined by how a person makes use of the funds.
Periodic Lottery Winnings
Lottery winnings that are payable as a series of periodic instalments for a determined period of time or “for life” will be calculated as part of a person’s ordinary annual income for that period.
Example:
For lottery winnings received in annual instalments of $50,000 per year for 10 years in lottery winnings, each instalment is assessed as income over 12 months.