A disabled teacher who scooped up $60,000 (£33,700) in an Australian lottery scheme had his pension slashed by almost $500 (£281) every fortnight – despite lottery wins being tax-free.

Craig Hill, 61, regularly enters the Australian Lott's Set for Life game and bagged a win of $5,000 (£2.8k), which will be paid monthly for the next year, on October 14.

The Australian Taxation Office stated that, like all lottery wins, his prize was not taxable – however, he soon discovered his fortnightly $821.20 (£462) disability pension allowance would be cut to just $328.20 (£184).

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This is because his monthly lottery payout now means Centrelink, Australia's social security payments service, now considers him a "professional gambler."

Hill, who claims a disability pension after being diagnosed with schizophrenia and PTSD, said he asked for a review of the decision.

However, he claimed that the review simply led Centrelink officers to cut his wife's carer's allowance by about the same amount as his pension on top of the original deduction.

He told Daily Mail Australia: "I did the right thing and contacted Centrelink and they told me because it was paid monthly it counted as income from gambling.

"So I asked if I could deduct all my gambling losses over the past 20 years and they said no, you only become a professional gambler on the day you win.

"If I'd won $600,000 (£337,707) on the Powerball it wouldn't affect my pension but because it's paid monthly I'm a professional gambler, it's ridiculous."

Staff at Centrelink allegedly told Hill he could escalate the dispute to the Administrative Appeals Tribunal – but he would risk his pension for the last seven years being audited.

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He added: "There's a culture in some of these departments where they see clients as the enemy but if they didn't have clients they wouldn't have jobs."

Hill also asked the lottery company behind the win if his winnings could be paid as a lump sum in a bid to fix the issue – but he claims they turned down his request without a reason.

The teacher added he wasn't a professional gambler and, aside from entering the Set for Life draw, only bid on the Powerball when the jackpot was high.

"I'm not betting on the horses or going to the casino, I maybe have a bit of a lash on the poker machines once in a while," he admitted.

Hill received his psychological diagnoses 18 years ago and they have been attributed to his work as a prison guard.

But after he was held hostage by eight inmates at Townsville Prison, he developed crippling anxiety that has almost completely stopped him from leaving his home in Brisbane.

He now takes on occasional clerical work, which he can do from home, and declares his income from this on a statement submitted to Centrelink every three months.

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The Social Services Department told Daily Mail Australia that very few income amounts were excluded from welfare calculations – even if they are won in a lottery.

"Lottery winnings that are received periodically, for example on a monthly basis for an indefinite length of time, are assessed as income for the period to which they relate," the organisation said.

"This is consistent with the principle of targeting assistance to those who need it most.

"A periodic lottery winning is an ongoing source of income which can be used for a person’s own self-support."

The department added that Hill's wife's carer payment was affected because the pension is calculated based on the income of both partners.

"This is based on the principle that couples are able to pool their resources for their mutual benefit."

"Accordingly, the income of each member of a couple is assessed for the purposes of the social security pension income test."


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