Gambling Income IS Taxable in Canada

[cassette]

I am considering going “pro” this coming September. One of the perks that influenced this decision is the fact that I have read on this board many times that if you live in Canada your poker winnings will not be taxed. After a bit of research I believe I have found this to be incorrect.

The first thing I did was look at Revenue Canada’s website: http://www.cra-arc.gc.ca/

I found this document: http://www.cra-arc.gc.ca/E/pub/tp/it...it334r2-e.html

The important bit reads:

“Gambling Profits
10. Profits derived from bookmaking or from the operation of any gambling establishment (carried on legally or otherwise) constitute income from a business. In addition, an individual may be subject to tax on income derived from gambling itself, if the gambling activities constitute carrying on the business of gambling; see the decision of MNR v. Morden, (1961) CTC 484, 61 DTC 1266 (Ex. Ct.). The issue of whether or not an individual's activities are such that he or she can be considered to be carrying on a gambling business is a question of fact that can be determined only by an examination of all of the circumstances and the taxpayer's entire course of conduct. Although no one factor may be conclusive, the following criteria should be considered in making the determination:
(a) the degree of organization that is present in the pursuit of this activity by the taxpayer,
(b) the existence of special knowledge or inside information that enables the taxpayer to reduce the element of chance,
(c) the taxpayer's intention to gamble for pleasure as compared with any intention to gamble for profit as a means of gaining a livelihood, and
(d) the extent of the taxpayer's gambling activities, including the number and frequency of bets.”
This seemed fairly straightforward. If you are gambling with the intention of making it your livelihood you will be subject to tax on this income.

I didn’t really like the sound of this so I gave Revenue Canada a call. The individual I spoke with listened to me explain that I intended to gamble for a living and then put me on hold for about 10 minutes while he spoke with someone higher up. He eventually came back and referred me to the document that I have quoted above. His explanation was a little more vague. He said that it is very difficult for the government to prove that you are gambling professionally and not for leisure. In his words, “this is a very grey area.” When asked to elaborate he explained that the gov’t would take into consideration the frequency and results of your play as well as a number of other factors when considering whether or not your income would be taxable. Finally, he gave me the phone number for Business Enquiries and told me that they would be able to tell me whether my gambling would be considered a home business.

Here I spoke to a surly man that told me there was “absolutely no way he could make a decision on my case over the phone when I was God knows how many miles away from him.” I thought this was kind of weird and asked his advice. He said that my income would almost certainly be taxable if it were my sole source of income. He said that I should go speak to my accountant.

Knowing nothing about accountants I call up one with a professional looking ad claiming to have “30 years experience.” This was a dumb way to find an accountant but all my friends are poor and no one I know has ever even been to an accountant, let alone able to give me an idea of a good place to go.

So I head over to this place and have a sit down to explain my situation. I say that I have been playing poker and blackjack for x amount of time on the internet (plus a little B+M play) and am considering going pro. I tell her Revenue Canada asked me to speak with an accountant and that I would like her to look into this issue for me. She takes down some basic info about the frequency of my play, how much I’m making and whatnot.

About a week later the accountant gets back to me and basically just reads me the original document from Revenue Canada’s website that I have referenced above. Her opinion is that if poker is my sole source of income than it will definitely be taxable. Her advice is to either get another job and play part time (in which case I would not pay taxes because it would then be seen as leisure), or to come in to the office again for a more in depth meeting about how to keep records, and what kind of things I can write off (gas to the casino, rent, internet, ect).

So from this little bit of scrounging around it seems that gambling income DEFINITLEY IS taxable in Canada.

I would be interested to here from Canadian pros who either are or are not currently paying taxes.

Right now my plan is to work 10-15 hours a week at my current job to maintain some health benefits and avoid taxes.

Thoughts?

[lefty rosen]

Yes it's taxable but if you make a relatively small amount the government won't care to know or know. I did get some questions when I was drawing a weekly cheque out of Neteller back in 03' (no red flags but tellers being nosy).

[cassette]

So this is common knowledge then? I was always under the impression that people thought Canada was a tax haven.

[krimson]

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So this is common knowledge then? I was always under the impression that people thought Canada was a tax haven.

[/ QUOTE ]

No this is common knowledge. I remember an accountant on here before wording it as if poker is your primary source of income then you should be paying taxes on it. If you have a job and poker is a "hobby" then you don't need to pay taxes (or, more so, you can get away with not paying).

[maxpower72]

While Revenue Canada would like you to think that your poker winnings are taxable they as of yet are not. Revenue Canada has lost the three and only times that they have tried to take this to court. It is not an enforceable law as the big casinos and OLGC have a ton of market research and data that says the increase in tax revenue would be dwarfed by the loss of play. The regular winners playing on the $1000 min no limit table at Casino Windsor pull down huge cake and it is income tax free. Damn I wish I had the roll to play in that game. [img]/images/graemlins/tongue.gif[/img]

[cassette]

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Revenue Canada has lost the three and only times that they have tried to take this to court.

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link?

[maxpower72]

Don't have it. It is on the OLGC intranet.

[chief444]

Yeah, if it's your only income you'll have to pay.

For me even when I start working I'll have to pay Canadian taxes on my income here and US taxes on my gambling income. So it's really not much of a "haven".

[toxtox]

So do you think that these Canadian poker pros hide their money or keep it in accounts/investments yet do not declare it on taxes?

[maxpower72]

The couple of them that I have talked to say they put it right in the bank. The casino makes a big point of telling everyone that all gambling winnings are income tax free.