Winning the lottery. It’s the stuff of dreams, isn’t it?
One moment you’re checking your Powerball ticket, and the next you’re imagining a life of luxury, travel, and never having to worry about bills again.
But for those receiving government payments—or even just thinking about their taxes—experts warn there may be a catch.
While one lucky Sydneysider is waking up today with a staggering $100 million in the bank, there’s a quiet alert going out to others across the country.
And if you’re not careful, this kind of windfall could come with long-term consequences.
Tax time: What the ATO wants you to know
Let’s start with the good news. If you win the lottery in Australia, you don’t have to pay tax on your winnings.
That’s right—unlike some countries where the taxman takes a hefty slice, here your prize is all yours.
The Australian Taxation Office (ATO) says, ‘You don’t need to declare your winnings to us, and you won’t pay tax on them.’
But—and there’s always a but—if you deposit your winnings in the bank and earn interest, that interest is considered income and is taxable.
For example, if you stashed your $100 million in a savings account with a five per cent interest rate, you’d earn a cool $5 million in interest in just one year.
That $5 million would need to be declared on your tax return, and you’d pay tax on it at your marginal rate.
So, while the initial windfall is tax-free, the money it makes for you isn’t.
This is where things can get complicated, and why financial experts like James Wrigley from First Financial recommend seeking professional advice before you start spending.
A good adviser can help you structure your finances to minimise tax and make your money last.
Centrelink and lottery wins: Don’t get caught out
If you’re receiving Centrelink payments, a big lottery win can have a major impact.
Services Australia (which runs Centrelink) doesn’t usually count lottery wins as income, because they’re considered a one-off event—something that’s ‘unlikely to happen again’ and ‘hard to predict’.
Plus, you didn’t earn the money by working for it. However, how you receive your winnings matters.
Most lottery winners take their prize as a lump sum, which is generally treated as an asset rather than income.
But if you choose to have your winnings paid out in regular instalments over several years, Centrelink may treat those payments as income, which could reduce or even cancel your benefits.
This isn’t just a theoretical risk. South Australian Frank Kemmler found himself removed from the Disability Support Pension after winning $60,000 in the lottery.
He claimed he wasn’t given a choice between a lump sum and regular payments, and suddenly had to pay for medical expenses that were previously covered by his pension.
‘I’m just trying to stop other people from falling into the same trap,’ he told A Current Affair.
‘There’s no warning anywhere to say that you’re going to lose your pension.’
What should you do if you win?
If you’re on Centrelink and you win big, the first thing you should do is tell Services Australia about your new financial situation.
Even if you take a lump sum, your payments could be affected because Centrelink will include your winnings in your asset test.
If your total assets (including your new fortune) go over a certain threshold, your payments could be reduced or stopped altogether.
It’s always better to be upfront—failing to report a change in your circumstances can lead to overpayments, debts, or even legal trouble down the track.
A winning entry from NSW has won the entire #Powerball100M jackpot in tonight's draw 1517. Results: https://t.co/rRHWLy8Qo2 #gambleresponsibly Gamblers Help 1800 858 858 pic.twitter.com/XQfINoe8nI
— The Lott (@theLott) June 12, 2025
The odds and the aftermath
For those of us who didn’t win (which, let’s face it, is almost everyone), it’s worth remembering just how rare a win like this is. The odds of winning the Powerball jackpot are one in 134 million.
In last night’s draw, more than 10 million tickets were sold, and half of all Australian adults had a go.
There were six Division Two winners, each taking home $282,415.55, and over three million smaller prizes were handed out, averaging just $19 each.
So, if you’re feeling a bit disappointed, you’re in good company!
Tips for handling a lottery windfall
If you ever do find yourself holding that golden ticket, here are a few tips to keep your good fortune from turning into a headache:
- Keep it quiet: Before you tell the world, take a breath and think about your next steps.
- Get professional advice: Speak to a financial adviser, accountant, and even a lawyer. They can help you manage your money, minimise tax, and protect your assets.
- Think about your Centrelink payments: If you’re on a pension or benefit, contact Services Australia straight away and ask how your win will affect you.
- Plan for the future: It’s easy to get carried away, but a big win can disappear quickly if you’re not careful. Make a plan for your money and stick to it.
Your turn: Have you faced a windfall moment?
Winning the lottery may be rare, but changes in finances happen every day—especially for older Australians managing Centrelink and retirement income.
If luck smiled on you with a massive lottery win, what would be your first move? Share your plans or experiences in the comments and let’s open the conversation on how to wisely manage sudden financial changes—whether it’s $100 or $100 million.
Also read: Powerball winners warned about costly mistake before $30 million draw
