Quote:
Originally Posted by TorontoCFE
Poker is normally a windfall (meaning you had no right to any money and could not reasonably expect to receive anything) and is thus not taxable.
Poker is not unique - various activities can move between sources or between a source and not a source (and thus have different tax treatment is different situations).).
The current tax code predates the poker boom. It was written at a time when the most prominent legal gambling activity was the lottery - a pure game of chance with the state itself acting as the counterparty. Since the state profits directly from the holding of a lottery, and since there is essentially no winning strategy to playing a lottery, it was thought right and proper (not to mention good marketing) to make the winnings tax free.
Poker is unique in the sense that it is considered gambling but the state does not act as a counter-party directly - it only profits through the collection of rake (at least in the case of B&M games in this country). It is also unique due to its prominence compared to other activities that can, as you say, move between sources. It may happen elsewhere, but in this case everyone can see that Mr. Duhamel and Mr. Jarvis both made alot of money doing exactly the same thing. And now people have been told that only Mr. Duhamel has to pay taxes on his poker earnings, while Mr. Jarvis does not have to pay taxes in Canada, and that it would have made no difference if it had been Mr. Jarvis who had won. Indeed, had Jarvis won he would have gotten a bigger tax exemption than the whole 8th place prize.
I do believe the current law was not written with this situation in mind.
Quote:
Originally Posted by TorontoCFE
The intent was to lighten the administrative burden and the potential tax abuse of people.
Poker fell through the cracks then obviously. The current code invites just the opposite - if I work a part time job and grind 60 hours a week online then are my winnings still windfall? I could certainly make them appear so!
Quote:
Originally Posted by TorontoCFE
The government does not want to subsidize people's hobbies that they would do even without tax breaks.).
Which is why lotteries are tax free - most people would not play against the state if they got dinged tax on the winnings too. But gamblers will play poker against each other whether the winnings are taxed or not.
Quote:
Originally Posted by TorontoCFE
The system is mostly fair and easily understood and far less complex than some countries' tax codes.
I would agree more or less, but poker currently is an exception that sticks out like a sore thumb.
The tax code is meant to change with changing times - remember capital gains once upon a time were untaxed. A fair solution would be to distinguish between games of chance played against the state (like lotteries, roulette or even blackjack the way that game is played here) and games of skill played against one another (like poker), with winnings in the former being tax free and earnings in the latter being taxed, perhaps beyond a modest threshold.