If you make a bundle gambling on line - do you have to pay taxes on what you win?

News 100 blueClaire Nash

October 17, 2019



Gambling - accounting papers

No need to do any tax accounting for your on-line wins

We won’t be exaggerating if we state that taxes are every Canadian’s worst nightmare! And when it comes to online gambling, an immediate question asked by every player is – are they required to pay taxes on their winnings at such platforms?

Well, the good news is that you don’t need to pay any taxes on such winnings if you are only a recreational player and a Canadian resident.

So, I could sign up to www.casino.com to play the desert treasure slot, win a huge sum and get to take the entire win home, without paying anything to the exchequer.

Why casino players aren’t required to pay any taxes.
Canadian government can’t tax any gambling activity because it doesn’t serve as a regular source of income, and doesn’t originate from property, employment or any other regular earning means. Gambling also isn’t considered a type of business and majority of Canadians don’t live off their gambling winnings. In the eyes of the law, taxing such events will not be fair. Here’s more on the peculiarities of gambling in Canada.

Are Canadians required to pay any taxes on gambling winnings?
No, there is no need for Canadians to pay any taxes on winnings from gambling activities like lotteries, sports betting, horse racing, online casinos etc. however, you must declare any interest earned on these winnings in the T5 form. Any such interest is taxable in nature and you could be fined if you are caught not paying taxes on it.

Are professional Canadian gamblers required to pay taxes?
Anyone who gambles full-time, whether off-line or online, and makes a living from the activity, must pay taxes on their winnings. Hence, professional blackjack players, poker players or anyone who calls themselves a professional gambler, will be perceived as a running a freelance business, the income from which is taxable in Canada.

However, there’s a catch. The Canada Revenue Agency has been very slow in assessing and auditing people whose primary source of income is gambling. Why this is so is because these people are essentially operating the business and the profits earned from the business are taxable.

Gambling tax calculator

No calculations to be done.

But the same business can lead to major losses, reducing overall income. If the Canadian revenue agency starts taxing these professional players in a forceful manner, it could have a very bad domino effect throughout Canada.

This doesn’t mean that if you are a professional gambler, you should avoid paying any taxes. It’s only information that you should be aware of.

Furthermore, a court ruling in 2012 stated that gambling losses aren’t tax write-offs.

Gambling wins in Vegas or US as a Canadian citizen
Anyone who visits Las Vegas or United States to gamble and comes back with the winnings, must pay close to half of their winnings exceeding US$ 1200 as taxes to the government. If you thought you could just avoid declaring any such income, well, think again! When you walk up to cash out your winnings at the booth, 30% is deducted as tax at source there and then!

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