BTW, I'm nearly 100% sure that the player profiled in that Vancouver Sun article is KrisQueen -- the (in)famous muppet who is on a lifetime Party heater the likes of which most of us can only imagine. Seriously. You have no idea how hot this guy runs.

btw, whoever suggested that the term "legitimizing his gains" meant that he was paying taxes on his winnings didn't read the article >> it just meant that he was taking his winnings and investing them (a more traditional income-generating activity) in a restaurant group.

bump.. more discussion please guys

I'm going to throw in a post about Cdn. tax return software.
Usually used Taxwiz, then Quicktax last year.

This year the greedies at Intuit (Quicktax) want $15 per return over $25k income.
That's $90 for my family plus 2 frinds I help out.

Googling found a few free ones(donations accepted). After reading some reviews I'm trying StudioTax.

It's approved by CCRA, so I downloaded it, have done 1 return, ready to Netfile. It looks like it'll work fine. Sending them $20 if so.

Anyone else with any comments or advice?


Rainbow...

LOL. Muppet. That might have to be his new nickname.

Talked to Kyle this weekend about the article. He's spent a large amount of money getting tax advice and has come to the conclusion he has nothing to worry about. Not saying I agree or disagree, but that is why he didn't care about the publicity.

It means you probably arent as pro as you think.

Any chance someone can get him to comment here? I have spoken to two different tax accountants and both of them have told me that the letter of the law basically says I probably "should" be paying. They also went on to say if you didn't pay it seems unlikely you would ever be forced to.

If someone in his position is so positive that he does not have to pay it would be wonderful if he could share that information with the rest of 2+2.

Adam, can you get Kyle to post something here ASAP? Tax season is on our doorstep!

Probably not, though I will ask him. He didn't seem like he really knew, just that some expensive people told him that was that.

When I asked him what made the tax pros so sure, he said a couple things that I didn't really understand and something about the government would have to give write-offs to those that lose at all other gambling. I said "you don't even know what a write-off is do you?" and he didn't get it.

The claim that the CRA would have to give deductions to all of the losers out there is simplistic and naive. Getting the deduction would not be automatic.
The CRA would simply deny the deduction when everyone filed their returns and put the onus on the taxpayers to appeal and declare themselves in the poker business to get the deduction and prove they are overall winners, etc. Then the CRA watching you from then on for declaring winnings and forcing taxpayers to put up the money to fight to get their losses deducted. They also get taxpayers admitting the taxability of gaming income which helps their case with legitimate pros.
This would be cheaper and very easy for the CRA and they would still get to tax the pro players.

The only thing holding back the CRA from going after a lot of people for taxes is the need for a court case holding up the concept of being in the business of professional gambling. If they can get that then they are likely to start going after people actively.

It is absolutely 100% that gaming income can become taxable if you are in it as a business from a technical tax law standpoint. The only hitch for the government is getting the courts used to the idea that someone can actually be in gaming just like any other business and treat it the same.

If the CRA was smart, they would pick a case like this and then argue:
1. Get a well known math type to demonstrate that there is skill involved and determines longterm expectation.
2. Introduce examples of players who are consistent winners year after year and well known pros who will say that the winnings are because of the players' skill at the game.
3. Draw comparisons to other "hobbies" like art collecting and hobby farming where tax law specifically says once a hobby starts making a profit it is taxable business income and any losses from your hobby is denied. This would downplay the poker is gambling case and the tax taboos as well as allow the CRA to later deny losses to the millions of recreational players.
4. Establish that the taxpayer is in the business of poker through:
Time invested
Need to live off of the income from gaming
Lack of pursuit of other income sources, jobs, etc.
Long term results
All of the other normal factors used to a lesser degree
5. Point out that not looking at poker as a legitimate and thus taxable occupation unduly shifts the tax burden to other taxpayers by giving the poker players a free ride and is thus bad public policy and unfair legal precedent.

A full approach like this is very likely to give the CRA the victory it needs (and it only needs one) if they pick the right case. Allowing yourself to be held out publicly only makes it more likely they will try to use you as their example.

Agree 100% with TorontoCFE. I'm actually not sure why this thread continues. If I'm not mistaken TorontoCFE is a lawyer. I was a lawyer. We've both said the exact same thing several times. The answer above is correct. There is nothing more to say about it.

Lol at you deciding if we should discuss the issue after your self-appointed ruling. You could always just not open the thread from here on out.

Well perhaps he could at least pass on the name or phone number of these expensive people?

LOL, yes Henry, this does come across as a pretty arrogant post. If this was the "Are Canadian pro players required to pay tax - I need a definitive answer from a lawyer" thread, AND we were to assume the two of you were absolutely correct (I believe you likely are, but that's not the point I'm making), then maybe TTHRIC.

However, it's a thread where people are discussing/debating many points around taxes for Canadian poker players. Although your contributions are of course welcome, if you don't like the thread, as Adam said, don't open it.

I rarely open it. I know what the legal position is on gambling and taxes in Canada. The post was not meant to be arrogant just to point out the fact that the thread has become circular. I haven't bothered to read it for 4 months and when I do it is exactly where it was 4 months ago.

Yes but a lot of it is simply bad advise. When I jumped back into this thread it was to correct a post offering someone advise which was wrong.

Called him and left a message. Will PM you with whatever he gives me.

Not sure if it has been mentioned in here, but the case against a quebec sports lottery bettor was interesting. Here is a post elsewhere I found on it:

To summarize for others interested,
These articles are about a sports bettor in Quebec, who made about 7mill over 5 years and won his case against Revenue Canada who were trying to tax him.

Getting taxed in Canada on gambling is all about proving that what you do is a business. In this case, they hired "helpers" to make the bets which we don't have to worry about playing poker, but they only worked about 10min a day (poker looks more like a business in time invested). Another advantage to this sports bettor is he was betting through a sports lottery. Lottery winnings is specifically stated to be 100% tax exempt by Revenue Canada. Ends up they won the case, but it seems to me that they got lucky with their judge as he seemed to have the stereotypical view of gambling. Judge said their betting was compulsive and bizarre, where in fact they had system which involved statistical analysis and a computer program to help find the good bets.

Another note is the 1 article mentioned Revenue Canada has lost 12 of 14 cases where they have tried to tax gambling as a business. The 2nd article mentions to the wins for RC. A horse bettor who had inside information, and a pool pro who bet on his own games.

Has anyone here heard of an "Advanced Tax Ruling" before? My accountant brought this option to my attention and I might go this route.

Basically you send in your personal information. In our case details of what you do, frequency of playing, approximate number of hands, that you do it from home, all the facts, and they will take these into consideration and make a BINDING ruling.

My accountant believes they would base such a ruling on this:

"NO: IT-334R2

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"

He believes that if I were to go this route that I should specifically try to defend myself against those 4 points. So feel free to post defences here guys

An advanced tax ruling is when you ask CRA for clarity on a a unclear situation.

I believe it is unclear when people are publicly saying im making millions playing poker and not paying tax on it and the CRA doesn't go after them.

I would never do that advanced tax ruling if it's the CRA making the "binding ruling"

That isn't how an advanced tax ruling works. If I wanted one I would have to ask for one. It is used before you enter into a complicated transaction where there are complicated tax issues and the decision of whether you go ahead with the transaction or not is dependent on how CRA will treat the transaction. I don't see how it is of any use to professional gamblers.

There has been one incident of this, as far as I know, and that was too recent for CRA to do anything about. I assume you are talking about the guy in Vancouver?

Yeah I get that but regardless there are lots of people in similiar situations in Canada for many many years and the CRA has done nothing.

I'm not sure what it is you want the CRA to do? As I've said a million times the law on this is perfectly clear.

CRA has done nothing because for a long time the numbers were very small and it just wasn't worth it. It has only become worth pursuing in the last few years and now CRA is waiting for the perfect case. I don't know enough about the guy in Vancouver but he might have just handed it to them.

I guess i'm just frustrated because I know im going to do the right thing and pay but it pisses me off that the vast majority in my situation are just not going to pay and most if not all will get away with it.

Obviously you are choosing to pay because either you feel it is the morally correct thing to do or because you are very risk-adverse. Either way that is a personal decisions so I don't see why you care what others do.