How is gambling taxed in Canada?

[og5]

Just wondering because I am considering moving there, is it pretty much considered regular income as it is in the US? Or do you guys have it better up there [img]/images/graemlins/cool.gif[/img]

[trentcroad]

I have no idea and Im from Australia, but I thought it was tax free over there in canada.

[poker-penguin]

Having just come from footy training (and perhaps the pub), in Canada, I have nothing to add on the tax matter. But your avatar's jersey annoy me.

That is all.

[Mr_J]

AFL is a little gay.

[krimson]

The tax laws here for gambling income are very ambiguous. The general consensus is that you have to pay taxes if gambling is your primary source of income.

[jogumon]

When I was talking to my accountant about this, and explaining that I was winning lots of money playing poker, he basically laughed at me when I asked if I'd have to pay taxes on it. Gambling winnings. No taxes. Of course, I do have a day job, so maybe if you have no other income, it could be different.

[Twisty]

Gambling is tax free if it is considered a windfall.
If there is an expectation of profit it is taxable.
Now everyone hopes they will win when they gamble but if you play regularly and the primary reason you play is because you do win consistently then i would say it is taxable.

[teddyFBI]

[ QUOTE ]
Gambling is tax free if it is considered a windfall.
If there is an expectation of profit it is taxable.
Now everyone hopes they will win when they gamble but if you play regularly and the primary reason you play is because you do win consistently then i would say it is taxable.

[/ QUOTE ]

correct.

[sumdumguy]

[ QUOTE ]
The tax laws here for gambling income are very ambiguous. The general consensus is that you have to pay taxes if gambling is your primary source of income.

[/ QUOTE ]
The laws aren't exactly ambiguous. Or at least, they become very clear once one researches past court rulings and examines the "reasons for judgement" that justices painfully prepare, but few care to read. What is ambiguous, is how "we" approach our accountants and CRA when asking the question: Is gambling taxable?

If you asked a public accountant, CA or CGA, or ask a supervisor or auditor at CRA the question: Is gambling taxable? The reply will be 99.99% of the time: No it is not. It is considered windfall profits, just as windfall losses are not deductible.

If one is less ambiguous, that is, did not withhold information: What if I employed PT and GT+, applied material from TOP, HPFAP, and SSH, have a limited hand selection that is situationally adjusted, have a multi-year history with no end of year loss, and "expected" my endeavor to be profitable at the end of most taxation years?

Their response: It is not a windfall profit (or loss). It is income, which is taxable, and future losses are also deductible. Or to clarify, it is revenue, and one is entitled to deduct expenses associated with the generation of revenue, the net of which is taxable. It is a business organization or operation.

I've asked 2 CGA's, 2 CA's, my own company accountant (a CGA), my personal accountant (a CA in public practice) 1 CRA auditor, and 1 CRA supervisor, and the above is how they replied.

I dug a little deeper to find out why they don't make it a habit to audit suspected "pro" poker players that have not been reporting this income. The CRA supervisor gave me what I believe to be very sound reasoning. That is, as a vp of operations for more than a decade, I would hope my subordinates would make similar policy decisions with our company's limited resources. It would not be difficult for a small timer to get away with not paying taxes, as 47outs pretty much spelled out. But I wouldn't go so far as to advise someone that it would be "legal" or "risk-free" to do so.

It is relatively risk free for 47outs and his auditor friend. I'm sure his buddy would be among the first to know about a change in policy. One can always take advantage of the Volountary Disclosure Program; whereby, an individual taxpayer may disclose errors in past tax filings at no penalty. The right to exercise no-fault disclosure applies when the disclosure process begins prior to a CRA audit, and that the taxpayer comes totally clean. If one is later found to have withheld information, it can get nasty.

The policy may change in the very near future. In additional to TorontoCFE's suspicions, two accountants I've spoken with claim the policy is up for review. Further, a CRA auditor friend of a pro player I know has recently pressed him to come clean. The world is changing, the gambling market has grown considerably, and pro earnings are higher than ever.. this group of taxpayers may be deemed a higher audit priority and an efficient use of resources.


Other items of interest (which I hope I understand correctly),

Primary Income: There is no law that states a tax payer cannot have more than one vocation, nor any law that states only one vocation may be deemed taxable. Whether it is one's primary source of funds, would effect the probability of further investigation and likeliness of reassessment. There is no law that tax exempts gambling on the basis of secondary income.

Dollar Value: It seems the rich get richer. It is more difficult for CRA to assert that income is derived from gambling if you are rich. Presumably, with 500K in wages, with only 100K from gambling, they will tend to more easily believe one wagered big and simply got lucky.

Expectation of Profit: Is not merely what one in the here and now, or at the time, believed to be true. It can be equally interpreted to be a reasonable expectation of a reasonable man (or of CRA) based on an individual's performance history rather than what the individual taxpayer "claims" to be his actual belief or state of mind.

If one hears only that which they want to hear.. they are certifiable idiots. That we have pro players on this board that behave like this only supports my belief that any random retard can learn to beat recreational gamblers. On the other hand, if you make an informed decision to "gamble" with CRA.. that is your choice. I think most can get away with it. But that's something for you to deal with between your accountant and lawyer.

[M.B.E.]

[ QUOTE ]
I've asked 2 CGA's, 2 CA's, my own company accountant (a CGA), my personal accountant (a CA in public practice) 1 CRA auditor, and 1 CRA supervisor, and the above is how they replied.

[/ QUOTE ]
Nothing against any of those professionals, but I'd be more inclined to trust the opinion of a lawyer.