WOW!

This is bar none the best Canadian tax thread ever. I've learned so much from reading this thread than I ever had in the last few years. Thank you to all the posters and a very special thanks to TorontoCFE for all the great advice.

TorontoCFE I see that you are new to this forum. Very glad to have you here. The CCPC info is 'very' interesting. I can see myself and many other canadian readers in this forum
acquiring your services at tax time every year.

I don't know how involved in poker you are since you're so busy but I hope you become a pernament member here on 2+2. I like many others am so glad I found this forum because of threads like this. Your advice is like a goldmine. Thanks again.

I suspect that I may PM you in the future to help me out filling a corp tax return and all the other legal stuff maybe ?..hehe. The costs are very reasonable and you've definately given me a lot to think about that I've never had before. I'll see how my progress goes.

Welcome to the forum.

I echo all the posters in thanking you for all your help. Of all the threads Ive read here in the last couple years, this one is the most beneficial (to me at least). Its really hard to find someone like yourself who understands poker from the accountant point of view.

I too will PM you if you dont mind to aquire your services. Thanks for the offer.

Tuco.

Thanks for the kind words.
I have actually been reading the forums for about 5 years, and occasionally posted under a different screen name, mostly on tax issues.
Because I've been so busy, I haven't had a chance to play as much poker lately as I'd like (though that is changing - 57% ITM, 45% ROI online & 2BB/hr live) or as others do so I tend to refrain from commenting on poker, leaving that to others who are better qualified.
But I am usually here if needed.

I really appreciate you taking the time to exhaustively type out these details TCFE - Im sure this is VERY useful information for many of us - I know it is for me.

I am definitely interested in the corp you describe, maybe us Canadians can get a group rate for your services lol?

Playing live tonight I came across an article about taxes in the October 2004 issue of Canadian Poker Player (the one with a close up of a white guy with dark glasses on).

Tomorrow I will try and find it online and perhaps cut and paste it here. If not, I will try and write up a summary.

Oops. Ok, so I am the source of the 'tax advantageous' quote. As my lawyer said "way to go Einstein" I'll probably be responsible for every 35 year old Rob Baillie getting audited this year.

That being said, as far as I know, ATM transactions are not tracked. Your Neteller would show withdrawals but not where they occured (if you used your debit card).

Also, since the 'gaming events' occur outside Canada are you even earning the money in Canada? Does this make a difference?

If you invest offshore and spend the profit offshore you don't owe tax on it. So if you spent all your Neteller cash outside Canada I don't think you have a tax obligation.

Rob Baillie

It doesn't matter where the money is earned or spent.
If you live in Canada or are deemed to live in Canada, then you are required to pay Canadian tax on your GLOBAL INCOME.

There is no legal way around that other than international tax treaties , but all that allows you to do is declare the income in Canada and deduct the foreign income tax paid against what you owe in Canada. If you aren't paying tax on it anywhere else, you pay the full amount to Canada.

Hmm...maybe I should rent a banquet room at Casino Rama and give a seminar about the poker player and taxes.

lol

231.2. (1) Notwithstanding any other provision of this Act, the Minister may, subject to subsection (2), for any purpose related to the administration or enforcement of this Act, including the collection of any amount payable under this Act by any person, by notice served personally or by registered or certified mail, require that any person provide, within such reasonable time as is stipulated in the notice,

(a) any information or additional information, including a return of income or a supplementary return; or

(b) any document.
.

231.6. (1) For the purposes of this section, "foreign-based information or document" means any information or document that is available or located outside Canada and that may be relevant to the administration or enforcement of this Act, including the collection of any amount payable under this Act by any person.
(2) Notwithstanding any other provision of this Act, the Minister may, by notice served personally or by registered or certified mail, require that a person resident in Canada or a non-resident person carrying on business in Canada provide any foreign-based information or document.

(3) The notice referred to in subsection 231.6(2) shall set out

(a) a reasonable period of time of not less than 90 days for the production of the information or document;

(b) a description of the information or document being sought; and

(c) the consequences under subsection 231.6(8) to the person of the failure to provide the information or documents being sought within the period of time set out in the notice.

What is the meaning of these sections?
Does it compel a taxpayer to produce screenshots of their transaction history with neteller or a poker site?

It means that the CRA can demand to see evidence to support your claims on your tax return and you have 90 days (more if they consent) to hand it over.
In practice this means seeing bank statements and cheques. Anything that does not customarily come with hard copies is not expected.

ttt

What types of records should we be keeping in case of a CRA audit? Will our Netteller and transaction histories from different poker rooms be enough or should we have records of all our sessions?

Would this not be the optimal way to declare a large sum poker withdrawal? The CRA may have share information with the US on Neteller accounts, but are poker sites such as PP, PS, Paradise etc. going to share and relay information back with the CRA? I highly doubt they will as the poker sites keep a very high level of confidentiality within its player base, thus even the CRA wouldn't be able to impose an audit through there.

Lawrence

Neteller is a publicly traded Canadian company, so the CRA doesn't have to pass the US for Neteller information.

TTT for tax season!

I've already filed my return and got my refund.

Thought I could find a better use for the money than the government could.

This is a great thread. Lots of info and nice to see some of the Canucks here. Has anyone ever had any problem withdrawing some winnings from their PP account? I know it's been over 2 months and have not received my bonus caps yet...so now wonder how long it would be before receiving some of my withdrawal profits. Anyone know?

Poker's not my full time job, but this is a great read with lots of fantastic info nonetheless.

Great thread, some really good information here.
Thanks for the advice TorontoCFE.
I hope you won't mind me pm'ing you to discuss a few things.

Here's one inportant thing to keep in mind on this issue.
All other court systems in Canada you are innocent till proven guilty. Only exception is Tax. You are guilty till you prove innocence.

Also not sure if this case has been decided but in Ontario they are going after the kids that play proselect ad make tons doing it. These guys were so good Ontario changed the maximum bet at each location so they have to drive around and place lots of small bets. I made a good chunk of chnage playing BJ for three years online and checked the taxlaws out. I do suggest keeping your neteller transfers smaller and utulize the neteller card even with the fees as this would be hard to tack. Bottom line is if you have a fulltime job you should be safe.

Though I have shredded every peice of info from my BJ bonus Hunting days

There is an important point that I don't think has been discussed.

That is, how do you determine your poker income for a given fiscal year.

Is it:

- Added value of all poker accounts + Neteller + withdrawals
- Only amounts going and remaining in Neteller + withdrawals
- Withdrawals to your bank account

Example:

A player has made 10k profits in 2004. 5k remain in different poker accounts, 3k are in Neteller, 2k have been withdrawn to bank account.

What portion of the profits should be declared for 2004 ?

Can they be considered profits before they are withdrawn to a bank account ? Much like a stock speculator who doesn't have to declare capital gains that are not locked in.

Is Neteller considered merely an extension of poker accounts or is it considered as a bank account for tax purposes ?

I really wonder if I should file a T1-ADJ, and if so, how much I should declare.

Some great info in this thread. Thanks TorontoCFE for all the advice!

Poker income for the year, strictly speaking, would be
easiest calculated by:

Value of all accounts Dec 31 2004
+ any amounts due you but not yet in your account (rakeback, tourny winnings not paid out yet)
+ withdrawals made during 2004
- deposits made during the year
- account balances Dec 31 2003

Technically, all profits as calculated above should be declared if you were in the "business of poker" and none otherwise.

Profits are considered taxable wehn earned not when converted to another asset (another account) or when received.
Profit is "locked in" when you get up from the table.

Neteller is just another bank account or asset treated no differently than any other account whether it be bank, mutual fund, brokerage or funds on deposit at a casino cage.

What to declare is really based on the formula:

Earnings from the business of poker (not necessarily ALL poker earnings - this is a key point I can elaborate on)
is your start. You then deduct poker expenses - car and travel expenses, internet connection fees, poker books, courses,etc., the portion of your rent or mortgage related to the space you use only for poker - what ever else you can find. This would give you the net taxable income you need to worry about.

You then can work backwards:
If you have no other income ,you have a personal exemption that allows you to make almost 10k a year taxfree.
Deduct that and any other deductions you have (spousal, educational, etc.) andyou have the amount of income sbuject to tax.

You then have some choices depending on your situation - you can put the difference into an RRSP if you have room, etc. so that your income subject to tax is as small as possible.

To answer the question of what you declare, see the above calcualtion. The only flexibility is what portion of your income is "business". Even if you are a true pro player, then winnings from games that are not your "normal" ones may not be taxable. If you get lucky and wina big multitable, then that would likely be taxfree- unless you are in the business of living off of the big tournies.

Found some good info on Pokereh.com, pretty much reiterates what's on this thread but useful nonetheless.

http://www.pokereh.com/legal/taxes.html

Not to mention all of the promo material for the Canadian Poker Tour Finals are touting a $1 million tax free prize pool.

These advertisements are everywhere - in magazines, one the web, etc...

Things may change but for now the government views poker winnings the same as hitting the 649 - a winfall. A few may show a profit but overall the government views gambling as (extracted from your linked article) "a losing proposition for most players".

I believe that neteller asks you for your social insurance number in case Revenue Canada needs to tracks stuff. I asked the people in Calgary (neteller's office) why it was required and do they forward information to the CCRA. They said that they would if required. And that CCRA requires you SIN number.