Taxes on winnings?

Ercules · Oct 04,2004, 12:16 PM

Something I have always wondered about and I think this would be a good place to ask.

Do online (or live) poker winnings get taxed? and if so how much?

Generally I just pull in about 100 a month from Ultimatebet or tigergaming and I can transfer the full amount to my account via neteller.

But what about big winnings? (Couple thousand or more)

Just curious. Thanks

sweetjimmi · Oct 04,2004, 12:25 PM

This comes up every once in a while. The easiest way to explain poker winnings in regards to Canadian tax laws is: Any income generated shall be taxable. Whether you claim all of your income is a personal/ethical decision.

I suggest you find a good tax accountant if you decide to claim your poker income. I have suggested this refferal to others in the past ...
http://www.cga-ontario.org/newfiles/...t/referral.htm
They will be able to hook you up with someone in your area who will be more than relaible.

Jamie.

Dead Money · Oct 04,2004, 08:21 PM

I am not 100% on this but in Ontario as well a most other provinces, lottery and casino winnings are tax free.

The example of this would be the 649 lottery. If you win you get it all, not like in the USA.

The current Liberal provincial governmet thought about taxing the casinos and lotteries but backed off.

Just my two cents.

88Fingers · Oct 04,2004, 09:23 PM

I think Dead Money is right - if it is "won" (i prefer the term "earned") at a casino, then it is currently tax-free, defined as a winfall.

I'm good with that.

PokerEH.com · Oct 04,2004, 10:28 PM

I have been self employed for a number of years, and have a pretty solid tax guy. I spoke with him about this issue, and to his knowedge, at this time, poker winnings are not taxable. He told me that the Ontario government is currently trying to pass some leglislation to make online winnings from poker rooms & casino's taxable, but it is still in the works. He told me I should keep a record of all profits received from poker, and if I recieve any cheques, deposit them in a seperate account from my business account, and keep the cheque stubs for reference, in case of an audit.

I think the grey area is if it is your 'business' to play poker, i.e. your only source of employment, it may be taxable? Just a thought.

Dave Scharf · Oct 04,2004, 11:01 PM

The upcoming issue of CPP has a few thoughts on this issue in it.

DJP · Oct 04,2004, 11:57 PM

But is a virtual casino on a server on a Native Reserve is a whole new beast? lol
Guess I better get to the casino to get an issue of CPP. Maybe I should have taken that free CPP membership. lol

sweetjimmi · Oct 05,2004, 07:17 AM

This is a very grey area but any earned income is taxable in Canada. Once you are a professional poker player your income for poker is taxable. The greyest area of all is whether or not your a professional poker player according to the government. One day they will make a clear cut decision but until then it is always best to seek the advice of a professional tax person.

STR82ACE · Oct 05,2004, 08:56 AM

I read in yesterday's Toronto Star that poker winnings from online games are indeed taxable, but only if you are declaring yourself a professional poker player. So long as it is deemed a HOBBY, winnings are not taxable. Not quite sure on the source of this though, so I could be wrong. I know for a fact I will never need worry about the government taxing any winnings. :banghead:

BBC Z · Oct 05,2004, 09:59 AM

Quote:

Originally Posted by STR82ACE

I read in yesterday's Toronto Star that poker winnings from online games are indeed taxable, but only if you are declaring yourself a professional poker player. So long as it is deemed a HOBBY, winnings are not taxable. Not quite sure on the source of this though, so I could be wrong. I know for a fact I will never need worry about the government taxing any winnings. :banghead:

Considering that article was trying to make pokerroom look like the biggest site on the internet (how could they not even mention partypoker in passing?) makes be take anything contained in that article with a grain of salt.

sweetjimmi · Oct 05,2004, 10:04 AM

Whether you like it or not anything that is basically not considered a "WINFALL" is taxable in Canada.

Here's a question ... do you consider your poker winnings a "WINFALL"? If winnings are happening often the goverment probably won't consider them a "WINFALL" but a source of income from a professional doing business.

torontoguy · Oct 05,2004, 01:27 PM

I am a lawyer, not tax lawyer but nevertheless I was curious about this question and about generally keeping my taxes down.

Please refer to:
http://www.cra-arc.gc.ca/E/pub/tp/it...it334r2-e.html
from which I quote(my bold):
"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.
It is clear from various decisions of the courts that earnings from illegal operations or illicit businesses, such as illegal gambling and fraudulent business schemes, are not exempt from tax. (See for example, the decisions in The Queen v. Poynton, (1972) CTC 411, 72 DTC 6329 (Ont. C.A.) and MNR v. Eldridge, (1964) CTC 545, 64 DTC 5338 (Ex. Ct.).) Hobbies

Hmm scary

11. In order for any activity or pursuit to be regarded as a source of income, there must be a reasonable expectation of profit. Where such an expectation does not exist (as is the case with most hobbies), neither amounts received nor expenses incurred are included in the income computation for tax purposes and any excess of expenses over receipts is a personal or living expense, the deduction of which is denied by paragraph 18(1)(h). On the other hand, if the hobby or pastime results in receipts of revenue in excess of expenses, that fact is a strong indication that the hobby is a venture with an expectation of profit; if so, the net income may be taxable as income from a business. "

One way to protect yourself while this is a grey area and if it eventually becomes more clear, is to document all of your LOSSES as much as possible. If a determination is made at some later point that you should pay taxes on your winnings to be determined, then the losses would offset some or all of your winnings resulting in a reduced or eliminated tax hit.

sweetjimmi · Oct 05,2004, 02:28 PM

There are many other things to reduce your poker income as well. You would basically be operating as business and therefore be able to claim expenses. Such expenses would include (at least a portion of) office space, internet, computer, and many other things.

Again, call a tax professional regarding these issue if you are considering claiming your poker profits. A tax professional will be the best people to help with this issue. I posted a link on this thread already.

Yod · Oct 05,2004, 11:59 PM

Im moving somewhere tax free if poker earnings become taxable.This is probably inevitable so the question becomes where is the cheapest,nicest tax free place to live with a good internet connection?Any opinions?