SYDNEY -- Australia taxes citizens heavily. The tax rate on incomes over $40,000 per year is 47 percent, and there are few deductions or loopholes to soften that bite. So it may seem peculiar that the government exempts from taxation one particular type of income: gambling winnings.

Under this nation's enviable system, profits earned at the track are taxable only if the bettor is a bona fide professional gambler, and relatively few people fit the definition.

"Anyone who is gambling mainly for pleasure would not be assessable," said Neil Mann, diretor of public affairs for the Australia Taxation Office. "A professional would be someone who operates in a systematic, businesslike way -- if he maintains an office and a staff and uses a computer to keep track of his records."

Some professionals do declare that gambling is their business, and they are entitled to the same type of benefits that other business owners receive. Their expenses are deductible. If they have losing years, they can write off the losses.

In the past, it was a popular scam for a taxpayer to declare a small profit from gambling, saying this was his business, and then take big writeoffs for losses the next year. So the government may not be eager to recognize a taxpayer as a professional bettor. And in the rare cases when the government has sought to collect back taxes from a winning bettor on the grounds he is a professional, the courts have tended to side with the gambler.

Australia's laws not only treat gambling sympathetically, they seem to encourage it. Some years ago, when the country's top tax rate was 66 percent, a prominent bookmaker -- a man well-schooled in the importance of percentages -- would buy a vast number of lottery tickets every week. He reasoned that this was actually a prudent investment, for the state only took a 38 percent cut from the lottery pool. When he finally hit a jackpot, he had lost a great deal of money on his total lottery investment, but still came out ahead -- because there was no tax on the payoff.

"The reason behind our laws," said Mann, "is that most people don't indulge in gambling to earn income; it's a recreational pastime. Winnings are considered as more of a windfall than income."

The same thing could be said in the United States too; few people reasonably expect to earn their income from betting. But gambling winnings are the last thing Congress would exempt from taxation. The difference in attitude is a cultural one.

With its Puritan traditions, America has always viewed gambling as unsavory. (Witness the fierce opposition of the National Football League to legalized wagering on its games; there is an assumption gambling would taint the sport.) In Australia, by contrast, gambling has no stigma attached to it. Even the prime minister goes to the track and bets enthusiastically. And the introduction of legalized betting on sports has stirred not a peep of protest.

The Australian system is designed to let its citizens enjoy gambling and relish their wins. Trainers and owners interviewed by the media after a victory may boast publicly about the damage they have inflicted on their bookmakers, for they have no need to be furtive. "I've never heard of the tax department breathing down anybody's neck after they've had a big win," said a prominent gambler.

In the United States, of course, the Internal Revenue Service is inescapable. Australian horseplayers are astonished that their American counterparts may have 20 percent of certain big wins withheld by the government before they even see the money.

A horseplayer who doesn't show a net profit for the year is entitled to get back the money withheld from him. But to do so, and to survive an IRS audit, he must be able to present a day-to-day record of his wins and losses for the entire year. The average horseplayer, who thinks of racing as a hobby, never does this, of course. If he hits a $10,000 trifecta in August, only then will he start thinking about taxes and record-keeping, but by then it's too late.

This is the appropriate month for every racing fan to adopt and stick to a New Year's resolution: Keep a notebook for gambling records, and after every trip at the track jot down the day's net profit or loss. This may be a nuisance, but it is the only way to avoid a losing confrontation with the tax authorities -- aside, of course, from emigrating to Australia.