Are There Taxes On Gambling Winnings In Canada - What's The Deal?
Looking at taxes on gambling winnings in Canada raises a few questions especially if a player wishes to be totally compliant with the laws of the land.
For example, does a recreational player have to pay taxes on gambling winnings in the first place? What if playing in a Poker tournament on Canadian soil, would taxes need to be paid? What if the player concerned was a professional, what about a non-resident?
There is one basic premise that all the above ties into. That is in each case a factual determination has to be made as to whether the player is actually carrying on the business, that of being a gambler, or that of being a Poker player.
This comes down to putting a players 'Source Income' under the spotlight as determined by the Canadian Authorities.
In Canada as per the Income Tax Act, Canadians are taxed at the following income producing sources, a business, an office, a property, employment or any other source.
Income derived from wagering or betting isn't from employment or an office and as far as coming from property, obviously there is no kind of connection whatsoever.
With regards to the classification of 'other source', the Canadian government have demonstrated a reluctance to define exactly what these unremunerated sources are.
It does seems unlikely that gambling would be included although interestingly, income illegally obtained or ill-gotten gains most definitely does fall into this category, and as such indeed then becomes taxable!
What about business, what about that? Someone who carries out business in Canada be they resident or non-resident is taxed on the profits that their business makes.
Can a gambler therefore be carrying out the business of gambling? Conceptually it's possible, but that said the two most prominent cases that have gone to court have been a snooker player hustling drunks for money and a pro golfer backing himself to win!
What about sports betting, games of chance and lotteries? In Canada Lottery winnings and casino games of chance such as Roulette, Craps or the slots are all considered free of tax.
As far as the official take on Sports Betting and a case that went to court where the accused had a system so in essence operating as a business, the ruling was they were compulsive gamblers and as such were considered tax exempt!
Are there taxes on gambling winnings derived from Poker? If one had provable million dollar earnings yearly, possibly. Whether one would still remain in Canada though, is another question!
