Published 24/05/2026 by Compaigns
It's one of the most common questions we get asked at Compaigns: "If I win a competition, do I have to pay tax on the prize?" It's a great question, and the answer — for most Australians — is reassuring. Here's what you need to know.
The short answer: probably not
For the vast majority of Australian competition entrants, prize winnings are not considered taxable income by the Australian Taxation Office (ATO). Competition prizes are generally treated as a windfall gain — an unexpected, one-off benefit — rather than income you've earned through work or a business activity.
This means that if you enter competitions as a hobby in your spare time and you're lucky enough to win a car, a holiday, or a cash prize, you generally won't need to declare it on your tax return or pay any additional tax on it.
When prizes CAN become taxable
There are situations where the ATO might view your competition winnings differently. These are worth understanding:
- You enter competitions professionally or as a business — If you enter competitions systematically at high volume with the genuine intention of making a profit (think: a dedicated "professional comper"), the ATO could classify it as a business activity. In that case, prizes could be treated as assessable income. This is rare and would require a significant, organised level of activity.
- Cash prizes above certain thresholds — Cash prizes themselves aren't taxed, but if you invest the winnings and earn interest or returns, that investment income is taxable in the normal way.
- Prizes won through your employer — If your employer runs a staff competition and you win a prize, this may be treated as a fringe benefit and could be subject to Fringe Benefits Tax (FBT).
- Prizes related to your work or profession — If you win a prize directly connected to your professional activities (for example, a photographer winning a photography competition that is part of their professional work), there is a greater chance it could be considered assessable income.
What about GST on prizes?
Prizes you receive as a competition winner are not subject to GST. GST is a business tax, and as the winner you're not conducting a business transaction when you receive your prize.
However, the promoter of the competition may have GST obligations on the prizes they provide — but that's their problem, not yours.
Do I need to declare it on my tax return?
For most casual compers in Australia, no — you don't need to declare competition winnings on your tax return. The ATO doesn't require you to report one-off windfall gains.
That said, it's always worth keeping a record of significant wins, particularly high-value prizes. If you ever face questions from the ATO, having documentation that shows the prize came from a legitimate competition (not unreported income) is useful to have.
Luxury prizes: cars, homes, and holidays
Winning a car, a holiday, or even a prize home is an exciting prospect — and again, for most people, these are tax-free at the point of winning. However, there can be downstream implications:
- Stamp duty — If you win a car or property, you may need to pay stamp duty when transferring ownership into your name. This varies by state and can be a significant cost on high-value prizes.
- Running costs — Winning a car doesn't cover registration, insurance, or fuel. Factor these ongoing costs in before you decide whether to keep the prize or sell it.
- Selling a prize — If you win a car and then sell it, any capital gain above the cost base (which may be zero) could theoretically attract Capital Gains Tax (CGT), though this is an area where individual circumstances matter a lot.
The bottom line
For everyday Australians entering competitions as a hobby, prize winnings are almost always tax-free. You can enter, win, and enjoy your prizes without worrying about a tax bill arriving in the mail.
If you're a particularly prolific comper, or if you win a very high-value prize, it's worth having a quick chat with an accountant to confirm your personal situation. Everyone's circumstances are different, and the ATO's approach can depend on the specifics of how and why you're entering competitions.
Want to put your tax-free winnings to the test? Browse today's competitions on Compaigns and start entering!
