Henry17, I tried to reply to you via PM but your box is full. I would few more questions if you can clear some your oldest pm

New article in the Globe mentions the 10k transfer tracking system and a tax team focused on tax evasion.

http://www.theglobeandmail.com/news/...ticle11779552/

There is more room in my box now. I got distracted turbo posting in a different topic so let PMs pile up.

Sorry guys, probably going to rehash some territory here, but read through 3 pages and haven't found an answer and that quote is confusing as hell.

I've been playing for several years, in US before BF basically breaking even and in Canada at school post-bf averaging ~3-5k/yr, if that,w/o crazy serious volume up until Jan 2013 (so covering 3 tax years).

After January started playing more (I play MTTs btw), scored in 4 tournaments for a total of ~24k net profit, then moved back to US for a paid summer internship and then back to Canada for school. Meaning I have a salaried job in the US, but have residency in Canada since >180 days. I am a citizen of both countries.

The question is, in Canada those wins are pretty clearly in the tax-exempt range as I had no expectation as a "professional", poker is just a fun hobby for this economist, but it would be taxable under cap gains in the US, where I have to file regardless of residency due to my citizenship. Any insights on what I should declare, where and under what type of income? Again apologies if Im covering old territory, but can't find the answer.

Can one of the knowledgeable tax advice posters please comment on how an equity fund, focused on Asia and incorporated in the British Virgin Isles, would be treated at tax time by the CRA? The fund legally does not pay capital gains or dividend taxes in the country it invests in. Would the position only be declared if a stakeholder sold a position (i.e. only report the holding of shares in the fund when capital gains or losses have been realized) or dividends were received?

Thanks for the help.

@Henry17, please empty some of your pms so we can bother you more.

did you get any news from the guys who got audited henry?

I have just skimmed some of the posts out of interest(being a CA and play poker for fun), what I don't understand if why anyone playing poker full time and making good money (profit) doesn't hire a CA or tax accountant to give them advice. Pretty simple, income less related expenses make to earn that income (this is where the advice helps and it can be grey) determines your taxable income. The issue relates to what is a professional or full time player - only source of income? They are getting better at finding pro players (Sweden using ranking sites) so why not file and not have to worry about a future audit. It should just be an issue of how to minimize your tax liability and setting up proper systems to track your earnings and allowable expenses.

May be they are getting the proper advice and the questions here are from people just starting to play full time. If that is the case, again, getting advice upfront may be worth the money so you start off on this path properly.

Sorry, just my 2 cents or less.

Space available

No. Just the one exchange. They might have tried to PM me but my box has been full for a while so they wouldn't have been able to.

One reason would be that in doing so you've implicitly acknowledged that you're engaging in business activity so you are pretty much now set on the track of paying income tax. The vast majority of people who should be paying income tax are not because it is +EV to play stupid and wait for CRA to say something which rarely happens.

If someone does decide to pay income tax and they make enough money. Hard to say where the line would be but $150k+ /year at least then getting professional help is likely a good idea. For less than that it comes down to how comfortable you are with these kinds of things. It isn't complicated but I'm also shocked by how clueless people generally are so maybe. A handful of times I've received PMs from people making greater than half a million and those people need both professional advice and also to do their own research since some of the options likely won't be mentioned by professionals.

The general consensus is that if you are audited in the future the consequences will be negligible. As such it is seen as a quasi-freeroll to not pay.

CRA does get better at detecting things but usually only way after the activity has ceased to be as profitable as it was in the peak. Xenon started in 2007-2008 to go after e-bay businesses but it was way late to the game and also a cooperative effort with other countries. Left to their own devices CRA is staffed by lazy idiots who never would have come up with something on their own. My estimate is that we are a couple of years away from any serious effort with respect to online poker. B&M players likely never have to worry unless they do stupid **** to call attention to themselves.

Your reasoning is very sound in terms of the +EV of taking a free roll and waiting to see if it every becomes an issue. The biggest concern would be for CRA to do an assessment based on site info such as OPR or similar. Like you said, not the most motivated group, but they have a policy of estimating a persons income and therefore a tax exposure or tax liability. It then becomes the taxpayers responsibilty to prove their estimate wrong with hard data. Best to keep an ear open for any activity by CRA in this regards and deal with it if it every becomes a target for them. Just keep good records in the meantime of all expenses and income just in case it becomes an issue.

I'm wondering if you declare your poker playing activities as carrying on a reasonable expectation of profit after some time of playing, incorporate, and pay yourself dividends, whether that would look like a good faith example to the CRA and protect assets already earned. Reduce income going forward by 18% but protect assets already won from taxes and potential penalties.

I assume OPR is a ranking site like the dozens that are out there. I'm not sure how CRA would be able to figure out that Ontario_NL_Pro is Mike Smith. That would require getting the information from the poker sites themselves which assuming Stars doesn't just want to hand it over freely a cross-jurisdictional effort that I can't see CRA doing unless they choose to go after poker players across the board.

This is a catch-22. You need to keep records because if they do go after you for lifestyle beyond your reported means the situation is a reverse onus and you need to disprove their usually high estimate. On the other hand having records is just one more item that puts you in the pro vs hobbyist category.

There are two things that come up with this plan.

1) Do poker sites TOS allow for corporations to play poker? It has been implied that they don't but normally turn a blind eye. This could cause issues but who knows. I would want some assurances from Stars that they are cool with this.

2) I read something in passing that seemed to imply that the ability to get dividends tax free up to a certain amount was going to end in 2014/2015. It seemed like a strange change to income tax rules but that is what I read. I have been meaning to go back and confirm this since I find it unbelievable but if true that would reduce the savings considerably.

Could you not set up a corporation such that Mike Smith is the person acting on behalf of the corporation, and he then registers his own name when playing poker?

Having taxes on all dividends received would make it less profitable for sure, but it would still mean a corporate tax rate on the winnings versus a personal tax rate. And if there was a reasonable degree of likelihood this strategy would help protect assets already taken from poker, it would be worth the trade off. But I'm not sure, just throwing it out there.

It is tricky for a couple of reasons.

- The sites are not cooperative about having accounts in corporate names ( I have asked many times). You will receive checks in your personal name and depositing those into corporate accounts is a bit tricky as you can "pierce the corporate veil." Perhaps some pure tax experts can comment on that.

- Banks are not that cooperative about setting up gambling based business accounts and the big ones screen corporate accounts quite a bit more.

- Maintaining one each year does require some expense.


I have read this thread over the years but have not really commented on it, but I will say that anyone who makes a decent amount at this as their job ($40k +) - if they are choosing to live off the grid they are making, in my opinion, a very short sighted choice.

I am sure many will regard this as "-EV" but I have documented and declared everything for over a decade and that has allowed me to establish a very healthy ability to get credit if ever needed (ie: property purchases), and as well I have a much better idea of where I stand (as I have detailed records for several years), and honestly it makes it easier to know I never have to really worry about the taxation aspect of my job because everything is properly planned and prepared by hired experts for this field.

I have an accountant who really knows what he is doing, and I suspect my tax situation is quite a bit more complex than many of the posters asking questions here, and I am happy to pass along simple contact information to him to those that need (zero in it for me for those who may ask), but when I have told him about this general topic he chuckles as I do at those who are choosing to live in the shadows for so long when frankly doing things properly is not that bad at all.

That being said, I do respect the long time posters who do give a fairly realistic assessment of how the government works, even though I do not entirely agree with the declare nothing "freeroll" approach.

It has been discussed before but in light of Monteroy's post it deserves mentioning again -- if your strategy is to hold your cash in a box under the bed for fear of getting a lifestyle audit then not declaring your income is -EV. The income you'd get from investing the funds will greatly exceed your tax liability. When we discussed this before we did the math and you're better off with a few years. I can't remember how many.

Another intangible aspect that may or may not have been covered in the thread ( while I have read it, I certainly missed chunks) is that to be blunt a lot of poker players would benefit greatly from having some structure in this area (I can speak first hand from having backed over 1,000 players to date ), and even if a player chooses to not declare for whatever reason they should consider talking to an expert to get a better idea of what their options are before making that choice.

I would also add that anyone who plays full time that clings to the belief that "gambling is tax free in Canada" is taking a healthy risk with that inaccurate belief structure.

There are reasonably strong attractions to incorporating. I don't believe that any of the legal hurdles mentioned above cut against incorporation for the long-term winning player.

henry17, your mailbox is full again. Cant PM you atm.

So I just finished reading this entire thread, and I would like to say thank you so much to all the people posting this useful information for so many years, I am extremely grateful!! particularly henry17, torontoCFE, TaxGuru.. Thanks again!

OK so now though I have some additional questions. I will start with the details about myself. I am a professional tournament player, I have been playing for several years with no other income, and making in the low 6 figures annually. I started playing as a student when I had some other very low income summer jobs for which I may or may not have filed income, depending on if I made enough money to warrant taxation. Other than those jobs, I have never filed any income. I also have never really had my own dwelling place, other than my university residences. I was living at my parents’ house at that time. For the past 1.5-2 years (after I dropped out of school, and also the time period where I made the most money) I have been living mostly abroad, say 85% of the time I am outside of Canada, visiting home for about 2 months at a time maximum. Specifically I lived mainly in Thailand, and like many other expats I used legal loopholes to acquire long term visas. Some visas I have used and/or plan to use are: tourist (the longest possible), business (no work permit), and student.

My first question will be regarding residency in Canada. It was mentioned several times in this thread that in order to be a non-resident of Canada you must sever all ties with the country, some common things mentioned were: dwelling place, property, bank account etc. It was also mentioned that perhaps you have to be a fiscal resident in another location to be considered a non-resident of Canada. I also read this link: http://www.cra-arc.gc.ca/tx/tchncl/n...f1-c1-eng.html
What I gathered from reading that article that was different from what I read in the thread was that, in a similar way to the threshold where a person becomes a “professiona/in the business of gambling” is a gray area, so too is the threshold where a person becomes a “non-resident”. For example in the article it mentions that having a Canadian bank account would be a factor to consider in whether or not I am a resident, but it would still be hypothetically possible for me to have a Canadian bank account and still be a non-resident. Given the situations with the visas I mentioned earlier, I have no idea if I qualify as a fiscal resident of Thailand, and I certainly don’t pay tax there. Also when I told my bank that I was going to be in Thailand for 6mo+ I was asked if I would be claiming non-residence. At the time I didn’t know anything about that so I just said no, but it suggests to me both that it is somewhat easy to apply for non-residency, and also that I could potentially still have the bank account.
So my questions: would I be considered a non-resident at this point in time? Do you have to specifically claim to be a non-resident before you are considered one? Any other thoughts on my situation/becoming a non-resident to minimize my required taxes?

Another thing that was mentioned in this thread several times was that having a notarized letter or something similar from a tax law professional saying that you believe you do not have to pay taxes would exonerate you from any tax evasion charges and possibly even interest in the event of an audit/requirement to pay backtaxes. It was also mentioned that this would be pretty much impossible to get a professional to give said letter; in fact someone offered a 5k reward to find someone who would do this.
Now, as a PURELY HYPOTHETICAL question:
Say I go to a tax professional, tell them that I have won a bunch of money in some big tournaments, and that now I plan to travel and play poker aswell with no other income.. I guess playing down or leaving out how much time I spend on this and how much I make annually and I got the letter, would that document also suffice to exonerate me of those tax evasion/interest charges?

Also if anyone has recommendations for good lawyers I could go to for professional advice regarding these questions, please pm me!!

At the time that you become non-resident you need to file a departure return with the CRA making clear that you are leaving Canada as a tax resident. At the time you leave, any capital property that you own will have a "deemed disposition" at fair market value (so if you own a house or stocks that have gone up in value, you will have a capital gain triggered). Also, there are some things that non-residents cannot enjoy (I believe TFSAs are no longer available once you are non-resident. Depending on where you are going, there may be a tax treaty that makes clearer where you are resident for tax purposes.

At this time I dont have any capital property so that isnt an issue for me. How would I find if there is a tax treaty between Canada and Thailand?

what about the other part about the letter from the tax professional?

thanks for your thoughts

Not sure if something like this has been asked in this thread previously, but I have dual citizenship with the US and Canada. I'm planning to live in Canada starting in the near future and poker is likely to be my only source of income.

Obviously I'd love to pay 0 taxes, but I believe there's a law for Americans that states they are taxed on income made abroad. My income will be taxed under American law, and at presumably at a lower rate than it will be under Canadian law. Is it reasonable for me to claim 0 income when filing Canadian taxes while claiming income when filing American taxes? Is it reasonable to claim 0 income on both filings due to me misunderstanding the tax laws? Who do I pay taxes to if I make a trip to Vegas and win money playing a live game or if I spend an extended period of time playing on both sides of the border during a year?

This year, for instance, I'll likely spend 9 months residing in the US and 3 months residing in Canada. Assuming I'm on the hook for the tax liability of my earnings, would I essentially divide my income into 2 subsets where I pay tax to only the American government for money won in the US, and I pay tax to the Canadian government when I win money in Canada, deducting those taxes from the tax owed to the Americans for those winnings?

I am really just looking for a broad overview right now so that I can understand what kind of records I need to keep if I decide to go the safe route and pay taxes to everyone who tries to take them from me.

Tax treaty between Canada and Thailand. Note, in particular, Article 4.
https://www.fin.gc.ca/treaties-conve...iland_-eng.asp

Also, this link has good information about how the CRA approaches the question of residence:

http://www.taxwiki.ca/S5-F1-C1+Deter...sidence+Status