This time, we’re going to look at Gambling Winning Taxes in Canada. Oh yeah, the one thing we all have to do that absolutely nobody in the world likes doing: paying taxes. Taxes for your living space, taxes for your earning wages, taxes for your car and now we gotta pay Taxes for our gambling winnings too?
Yeah, sorry for pulling your tail, dawg, but at least you don’t have to worry about it anymore. Rest assured that I am 99% sure that you don’t have to pay a cent of your winnings to the big bad taxman and, don’t worry, we’ll talk about the 1% too.
First of all, let’s get something straight. In order to tax incoming funds, there needs to be a steady trace, right? Exactly, seeing how you sometimes lose, other times win and then other times break even, you won’t exactly leave a steady trace, will you? That’s exactly why these things are hard to tax.
Online Casinos and Poker
While I’m sure many legal bodies would love to put taxes on our gambling winnings, one thing that’s always going to be our saving grace is luck. Because gambling is heavily luck-based, it’s impossible to predict how often someone would win. Seeing how every single game at an online casino is luck based, it’s almost impossible to tax.
Poker games are in the same boat. Even if you play poker and read your opponents like a hawk, you are eventually going to lose a few games. You may be thinking that it would be pretty easy to just take 30-40% of all your winnings as taxes but the Canadian Government would have to consider your time spent, your losses and so many other factors before they put a number on that tax and we haven’t even considered luck as a factor.
Online Racebooks are, surprise surprise, also luck-based. Thanks to their “lucky” nature, they too are considered a nightmare when it comes to taxing them. Think about it, if the Internal Revenue Service were to actually consider taxing Horse Racing winnings, they would have to consider deducting taxes on a lot of things before they even start talking about winning taxes.
Betting on eSports
I’m sure that if you asked a revenue agency worker how they would tax eSports betting winnings, you would make their head explode. I mean, just consider what they would have to take into consideration: eSports player conditions, electricity consumption, etc. Needless to say, if you want to bet on your favourite CS:GO or League of Legends team, the government won’t be able to take a cent.
Taxing Canadian Betting Sites and Casinos
So, by now you should know that gambling winnings aren’t taxed but what about online casinos themselves? Do they have to pay any taxes for their earnings? Yes, they absolutely do.
Unlike players who are playing luck-based games, running an online or a brick-and-mortar betting site is still a business. Last time I checked, every business, online or otherwise, needs to pay a tax and the government doesn’t give a toss whether they are hosting gambling games or selling bootleg comic books.
So, I don’t have to pay taxes on my casino winnings?
No, you don’t. Well, your boy Derrick is 99% sure that you don’t. The 1% exception would be if you were dubbed a professional gambler in the eyes of the government.
So, if you actually take a look at Canadian Gambling Taxes, you’ll find a section explaining how professional gamblers are required to pay taxes. A professional gambler will be treated as a freelancer and gambling would be treated as a freelance business. So, a professional gambler would have to give up part of their earnings as taxes.
Fortunately, the Canadian Revenue Agency is the one that ultimately decides who qualifies as a professional gambler. They take their sweet time in deciding when someone is worthy of the title. We’ll look at what exactly it means to be a professional gambler later but for now, let’s just say that they would be a non-traditional gambler.
A recreational gambler is someone who occasionally plays casino games and has gambling winnings and losses. Recreational Gamblers can keep their winnings tax free. We’re again coming back to luck. Since gambling winnings need luck and since luck is a factor that cannot be determined or calculated, the Canadian Revenue Agency has decided not to tax recreational gamblers on their gaming winnings.
What if the Revenue Agency decides that I’m a professional gambler?
I’m guessing that a few of you reading this are worried that just because you won a few games, that you may be labelled as professional gamblers. Well, rest assured, you aren’t. You were just lucky, dawg.
So, what is a professional gambler? In theory, a professional gambler would have to be someone who partakes in gambling activities and, against all odds, when you consider both winnings and losses, still makes a profit. Not just a random profit, mind you, a steady profit. Basically, a professional gambler would be someone who would go to a casino and come back with approximately the same amount of money every time, even if they keep losing. Did that make sense? Didn’t think so.
Professional gamblers are basically non-traditional gamblers that have tricked the system.
Is there a limit to how much I can win before they tax me?
No limits, dawg. Keep on winning and keep on racking in those sweet sweet tax-free winnings and when you are done, let us know how you keep doing that, hmm? I know I’m going to sound like a broken record but the Canadian Government will look at your winnings as if you found a wallet on the street and kept it for yourself. In other words, no matter how much money was in that wallet, they can’t really tax you for picking it up, dawg.
Gaming Winnings vs. Income Tax?
For the sake of this topic, let’s take a look at gambling winnings as a steady income. So, sometimes you will win C$100, other times you would win C$2,000. Then, sometimes you will lose C$500, and then you will break even. The Revenue agency would have to consider every single one of these instances and deduct some expenses before they come up with a number that would qualify as income tax. Yeah, you can see why this would be a mess to tax.
Sure, but only for professional gamblers. Remember, they are treated as freelancers and their winnings and losses are treated as their income. As far as the government is concerned, these are all necessary losses. Since being a professional gambler is treated as a job, it’s only natural that it would come with certain tax deductions.
What about the lottery? Will I have to pay lottery winnings taxes?
You would have to pay taxes IF you knew of a sure-fire way to win the lottery. Now, I’m just going to assume that you don’t have a way to win the lottery and say that it’s all based on luck. Again, since luck can’t be determined, it cannot be taxed.
Different Taxation for Brick-and-Mortar Casinos
Don’t worry, you still don’t have to pay taxes for winning at actual casinos. Trust me, dawg, the casino owners are already paying plenty of taxes for running their business. Players are not taxed for winning at casino games. When you buy chips or tokens at online casinos, a small amount of your deposit is already taken into account as taxes.
Any differences depending on the city, region or province?
No, there aren’t. Thousands and thousands of players all over Canada are betting on horse racing, casino games or eSports every day, and they have never been taxed. It doesn’t seem likely that things will change anytime soon.
What would happen if I gamble in a different country?
Listen to the lady in the picture. In other words, things would change things quite a bit, wouldn’t they? If you gambled at an online casino in a different country and won, you’d be subjected to that country’s laws concerning tax winnings.
For example: if you happen to win the jackpot in the USA, you’d have to pay almost half of your winnings as winning taxes. See why nobody likes the American IRS? If you are planning to take a trip somewhere and play some real-money games, it wouldn’t hurt to do a bit of research regarding winning taxes of that particular country.
Gambling Winnings Tax: Canada Summary
So, to summarize, if you are just some dawg who likes to visit the casino occasionally and sometimes makes a profit from winning, you won’t be taxed because you are still a recreational gambler. On the other hand, if you are someone who, no matter what, always makes a profit on playing casino games and the government labels you as a professional gambler, then don’t forget to pay your taxes, dawg.