• Are Online Poker Winnings Taxable In Canada Online
• Are Online Poker Winnings Taxable In Canada Today
• Are Online Poker Winnings Taxable In Canada 2019

No - Canadians do not have to pay taxes on gambling winnings from horse racing, sports betting, lotteries, online casinos and any other games of chance. However, if you earn interest on your winnings, you must legally declare that on a T5 form. This interest is taxable. Should you be caught not paying taxes on this, you could be fined. Like when you bet on sports online, when you play casino games and poker you do not need to pay taxes on your winnings unless it is your primary source of income (a general rarity in Canada except for a few poker players). The concept of not taxing gambling winnings is older than Canada itself. It started in England and says that unless you make a living exclusively from gambling, or treat gambling as a business, you should not pay taxes. The good news is that in Canada, your winnings are usually tax-free!

Everyone dreams of winning the lottery or hitting the jackpot at the casino. But you may wonder how much tax you’ll pay on all that money. The good news is that in Canada, your winnings are usually tax-free!

Lotteries

Winnings from a Canadian lottery such as Lotto Max or 649 are considered to be windfalls, and windfalls are not subject to tax.

Even winnings from a sweepstake or lottery sponsored by a charitable organization are generally tax-free. Everything from your local hockey team’s 50/50 draw to the Big Brothers/Big Sisters travel lotto vouchers are included in the windfall category and therefore not subject to tax.

However, though the Canada Revenue Agency (CRA) does not tax the winnings themselves, you may need to pay taxes on any income that money generates if you invest in a non-registered investment or account.

For example:

• If you put your lottery prize in the bank, any interest earned on that account will be taxable.
• If you invest some of your winnings in stocks or mutual funds, any dividends earned on the investments will be taxable. As will any Capital Gains you may make when you dispose of or sell the investments.

For this reason, if you do plan on investing your winnings, you may want to consider investing in your Tax Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) if you have the available contribution room. This TurboTax article explains further Paying Taxes on Investments.

Are Online Poker Winnings Taxable In Canada Online

Casinos

If you score big from a Canadian casino, your winnings will be treated the same as other lotteries and usually remain tax-free.

However, over the past few years, the CRA has begun looking for professional gamblers, classifying their “winnings” as business income and therefore taxable like any other business income. At the same time, this also means professional gamblers can claim business expenses. In theory, pro gamblers should also be able to claim losses as a business loss, but the CRA usually doesn’t allow it.

Workplace Contests

Prizes won from your place of employment aren’t always tax-free.

Cash awards or near-cash awards such as gift cards, are almost always considered to be taxable employment benefits. This means the award will be considered as part of your income and should be reported on your T4- Statement of Remuneration Paid in Box 40. Your employer will deduct income tax, Canada Pension Plan (CCP) and in some cases, Employment Insurance (EI) premiums on this type of award or prize.

What Happens in Vegas Stays in Vegas…

The rules discussed above only apply to winnings from Canadian sources. If you like to gamble or play lotteries that are based in the US, their government has different rules that would apply even if you are not a US citizen.

The US Internal Revenue Service (IRS) considers all winnings to be taxable. If you win a US lottery, you would have to file a US tax return and pay taxes on the prize. If you hit the jackpot at a casino, a good chunk of those winnings will be withheld by the casino to ensure your tax obligations are met before you even leave the country.

Even if you are gambling online from your own home, if you play on a US online poker site, any winnings or prize money will be considered to be American income and taxed accordingly.

With more than 20 years’ experience helping Canadians file their taxes confidently and get all the money they deserve, TurboTax products, including TurboTax Free, are available at www.turbotax.ca.

Related Posts

Gambling In America

Are Online Poker Winnings Taxable In Canada Today

If you've ever won a jackpot in Las Vegas, you probably know that your excitement diminishes at least a little when the casino throws a W-2G tax form in your face. In fact, if you don’t provide your social security number, the casino will automatically withhold up to 30% of your winnings. The same goes for lottery and horse racing wins above $1200. Yet when playing online, paying taxes isn’t always so black and white.

Americans who play at US-based online casinos will usually have to deal with withholding taxes just like in Las Vegas. Yet that only represents a small fraction of your entertainment options. When playing at licensed offshore online casinos or poker rooms, American players usually won’t hear the words taxes mentioned at all.

Sadly, it is never safe to assume that your winnings are ultimately tax-free. It is true that Americans who play at internet gambling sites outside of the USA won’t be subject to withholding taxes when withdrawing their winnings. Yet you may be required to report these gains when you file your taxes in April. The greatest determinant is the number, size, and frequency of your wins. The actual threshold varies from state to state and whether or not you are an amateur or professional. For more information on reportable gambling winnings visit the IRS guide: https://www.irs.gov/instructions/iw2g/ar02.html

Professional Gamblers

Whether or not you qualify as a professional gambler doesn’t solely depend on your performance at the tables. The main litmus test is the expectation and probability of profit in the eyes of the Internal Revenue Service. Your success and whether or not you have a regular job on top of gambling may also be factors.

With even amateur gamblers having to deal with taxes, professional gambling does have benefits. You can actually deduct your wins from your losses when your treat your gameplay as a business. No matter what your current status is and how often you play, it's best to keep tabs on your performance to develop strategies, stick to a budget, and simply know where you stand. You can find this tip sheet courtesy of the IRS: https://www.irs.gov/taxtopics/tc419.html

Whether or not the IRS can actually track your winnings is another matter entirely. Yet you should be aware of your obligations. With a huge budget deficit and ballooning debt, the federal government is looking to fill their financial holes any way they can. Between the NSA and modern forensic accounting practices, covering your digital tracks is more difficult than it used to be.

Tax Obligations Outside Of The USA

The United States is a bit of an outlier when it comes to taxing gambling winnings. In the United Kingdom, the government taxes the gross profits of casino operators rather than players. Canadians can play the lottery, live casinos, poker and online games without paying taxes unless they are a professional. Likewise, Australians and New Zealanders can also gamble tax-free. To put things in perspective, Americans do pay some of the lowest personal income taxes in the first world. Things tend to even out in the end.

Like anything else, interpreting the rules is always a matter of debate. Here's an interesting tax perspective for Canadians: http://business.financialpost.com/personal-finance/tax-expert-a-gamble-over-poker-winnings

Things To Consider

Keep in mind that Americans have to deal with both Federal and State taxes on most forms of income. Always keep basic records no matter how often you play or win. This will make things easier during tax season.

Are Online Poker Winnings Taxable In Canada 2019

Accountants Have The Answers

No matter where you live, it's always best to discuss your personal situation with a licensed tax professional in your area. You can usually get a short consultation for free with complete confidentiality. It's the best way to play by the rules while minimizing your tax burden.