> And the answer to your second question is, the payment would be "income" (defined as payment for completing work) and would fall under income tax. There's no exception in income tax for prizes because prizes aren't even income at all, as you don't work for them.
Is it really so clear cut? I'm thinking of things like programming competitions -- in a sense you "work" to win a prize at one of those, don't you? So then what stops my employer calling all of my work as a programmer a programming competition? You could say "the competition organizers can't profit off of the work", but is that always true? Netflix could've legally profited off of the entries in the Netflix competition (even though they didn't), right? Similar for Kaggle contests. Would prizes from those count as taxable income? And even on something like a game show, they're profiting (or hoping to) from your participation/appearance.
> And the answer to your second question is, the payment would be "income" (defined as payment for completing work) and would fall under income tax. There's no exception in income tax for prizes because prizes aren't even income at all, as you don't work for them.
Is it really so clear cut? I'm thinking of things like programming competitions -- in a sense you "work" to win a prize at one of those, don't you? So then what stops my employer calling all of my work as a programmer a programming competition? You could say "the competition organizers can't profit off of the work", but is that always true? Netflix could've legally profited off of the entries in the Netflix competition (even though they didn't), right? Similar for Kaggle contests. Would prizes from those count as taxable income? And even on something like a game show, they're profiting (or hoping to) from your participation/appearance.