$30m jackpot: how to give it away without taxman grabbing a share

Experts are offering advice on how to keep the taxman from grabbing a portion of tomorrow night's $30m jackpot. Photo / BOP Times

Big Wednesday's biggest draw - a $30 million jackpot of cash and prizes - will definitely go to at least one ticketholder tomorrow night.

And while the winner, or winners, will probably want to share the wealth with family and friends, such generosity can be taxed.

But there are ways to make sure the taxman is not a recipient of any Lotto largesse.

Liz Koh, director of Moneymax, said winners could avoid paying gift duty by setting up an interest-free loan repayable on demand.

"You can have it set up in your will so that when you die the loan is wiped."

Winners could also consider setting up family trusts with their assets in them: "In that way if you have all your assets in your trust you can make distributions out to beneficiaries," Ms Koh said.

"When it is set up there is a debt created to you and you need to forgive that debt at the rate of $27,000 a year. If you are a couple it is $54,000 a year."

Tomorrow night's First Division prize, aside from cash, includes two luxury cars, a $750,000 bach, a $250,000 credit card, $250,000 worth of travel and a boat.

In the event there is more than one winning ticket, the luxury prizes are converted to cash.

Spicers Wealth Management senior financial adviser Jeff Matthews said winners wishing to distribute their wealth could claim they bought their ticket for a syndicate.

But he suggested this would have to be written on the back of the ticket before it was presented.

"If you had argued that you went in and bought it with your 10 bucks, but you were doing it on behalf of your family syndicate, who is going to argue they didn't give you a dollar each?

"The thing is you would then have to distribute the money equally to everyone within the syndicate."

A lottery winner could buy other family members a house and charge them peppercorn rents as a means of avoiding gift duty.

But Ernst & Young tax partner Aaron Quintal said this was "technically a gift" under tax laws.

"If you are not charging someone adequate rent then that's prima facie a gift," he said.

Inland Revenue last year collected about $3 million in gift duty.