Clubs and their Adjuncts are regularly running sporting competitions, which includes Clubs New Zealand Tournaments such as Texas Hold'em Poker and 8 Ball, with individual prize money of over $500. The IRD are of the view that poker and pool tournaments fall within the definition of both sport and competition. The fact that a club may have applied for and received a Class 3 Gambling Licence is irrelevant, the issue is a tax issue not a Gambling Act issue.

The IRD has been specific and stated that Resident Withholding Tax (RWT) must be deducted for all poker tournaments when a prize in excess of $500 is paid.This is pursuant to the requirements contained in section RD8 and schedule 4, part F of the Income Tax Act 2007.

The Club can best address this by advertising the sum less 20% as the prize, so punters are not disappointed when they collect their cheque. There is also a requirement in the Gambling Act (Lottery) Game Rules 2004 that the prizes paid must be at least 20% of gross income. The threshold for deducting tax at source is outlined in the Inland Revenue tax guide IR 248.