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Originally Posted by Turtol
For Canadian taxes, I've heard such mixed things.
So learn to judge the source.
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Originally Posted by Turtol
People saying flat out you don't have to pay taxes,
Legally, that is sometimes incorrect.
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Originally Posted by Turtol
people say if they can prove it's your main source of income then you have to pay taxes,
That's often incorrect too.
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Originally Posted by Turtol
or you need to win 3/5 years and then you pay taxes
Like the previous statement, this a contributing consideration, not the salient fact.
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Originally Posted by Turtol
so I have no idea what the actual ruling is, and I don't want to get audited again.
The question of whether you aere legally required to pay taxes on net poker winnings comes down to a single matter of fact: are the winnings a windfall, or are they income from a (poker business) source.
Whether your poker winnings are your main source of income, and whether you have been winning for multiple years are pieces of evidence that go towards the decision on the question of fact. They are not the only pieces.
For example, say the only poker you play is an annual tournament that is held on Fathers's Day weekend, and that in the past two years you won first place once and second place the other time. In both cases the prize was greater than your annual income from your minimum wage job. So poker has been your main source of income for a couple years, and you have been profitable for a couple of years. Yet there is no way that you would be found to have had income from a poker business. You luckboxed your way to some prize money. That's a windfall. There's nothing else that indicates you were operating a poker business. You don't play regularly. There is no reason to say you had a reasonable expectation of profit when you entered those tournaments. You don't seem to to do anything to maximize your advantage, nor have you be shown to have specialized knowledge.
Meanwhile somebody who makes most of his income operating a landscaping business, bur who also regularly plays poker 20 hours per week and is a fairly consistent winner over multiple years, may indeed be found to be operating a poker business, even though his poker income is not his main source of income. The fact that he has been a fairly consistent winner for several years is not sufficient to prove he has a poker business. Other facts are required, such as an organized approach, special knowledge, and attempts to maximize outcomes.
The issue of whether your net poker winnings are taxable rests on the question of whether you were operating a poker business. The answer to that question depends on the collection of all relevant facts.
Then there is the separate question of whether CRA can prove you are running a poker business. It may be the fact that you are, but if you do not voluntarily report such income, it may be beyond CRA's ability to prove it is a fact, even though it is one. That doesn't mean you don't "have to" pay taxes, it just means you might get away with not paying taxes.