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Home / New Zealand

Lotto Powerball $42m jackpot: Interest alone earns you $844,000 a year

Luke Kirkness
By Luke Kirkness
Sport Planning Editor·NZ Herald·
23 Feb, 2020 11:00 PM2 mins to read

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What are your chances of actually winning the big one? Video / NZ Herald

Do you think you would be able to live off a yearly income of $844,000?

That would be the amount of cash you could have sitting in your bank account after-tax if you won Powerball's $42 million jackpot.

Powerball jetted to its second-largest ever jackpot in Lotto NZ history on Saturday after the $35m prize went unclaimed.

READ MORE:
• $42m Lotto Powerball jackpot up for grabs in Wednesday's draw
• $35m Lotto Powerball draw: No winners - prize jackpots to $42 million
• Lotto Powerball $35m jackpot: These day trips made New Zealanders millionaire's
• $18 million Lotto Powerball win still unclaimed

Now the prize sits at an eye-watering $42m for Wednesday night's draw.

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If you were lucky enough to win, you would not even be forced to pay tax on your prize - only on any interest you earn if you invested the prize.

But only if you, the winner, were a New Zealand tax resident, KPMG partner in tax Peter Scott told the Herald.

"That's a good thing about being in New Zealand, which is different to overseas jurisdictions which do tax those sorts of things," he said.

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"Obviously, you'll be taxed if you go and invest that based on the interest or investment earnings but not on the initial pay-out."

Lotto
Lotto

If you put the $42m in the bank with 3 per cent interest, you could earn a whopping $1,260,000 in interest each year.

The tax would not even take out a large bite of your earnings, assuming the cash was being earned directly and not through a company.

Of the $1.26m, around $416,000 would be lost in tax, leaving you with about $844,000 in your bank account.

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The bank would do the withholding tax for you and it would be withheld before the bank paid out the interest, Scott said.

But the $844,000 would be worth celebrating and would be more than ample to live off while your millions earned thousands.

It's more than 10 times what a secondary school teacher with more than five years' experience might earn yearly (around $71,000 to $80,000).

And Prime Minister Jacinda Ardern's impressive salary of $470,000 would not even come close to yours either.

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