To tax in the way roy talks about would be a very unfair system, and why we want the government to be able to introduce such unfair systems. That is crazy.

It should either be tax free, or the loses shouldnt count against earnings. Now the problem lies with the fact that if your a professional and overestimate your skills/opponents improve/variance and you go on a long bad streak that can all be written off, or should be allowed to.

Another question: if someone truly believes they are not taxable, and ends up losing that, going back through the past can they now expense all the things they could have before, such as rent, bills etc? Max out rsp in there proper portions etc...?

Not really. Tax evasion usually requires that you actively do something to hide income.

Normally the fines would be 5% + 1% for each month late to a max of 17% for a first offense. A second offense would be 10% + 2% for every month to a max of 50%.

For something like this in my experience they treat it all as one offense so it would be 17% across the board on what was owed every year.

In addition you would also have to pay interest which is not a big deal.

In this particular instance I don't believe he will be fined anything. The wording of the request letter implied that as long as it was all done by April 30th there would be no fines. It didn't explicitly say so but the language strongly implied it.

That they did not ask for 2001 and 2002 was odd. I know there is a 10 year limitation on federal tax debt but I was under the impression that it only applied if you filed and then avoiding making any payments for ten years. If you didn't file the debt would exist forever. I must have been wrong on this or possibly it changed when the government moved from a 6 year to a 10 year limitation.

Yes to the expenses as long as you can still document them. Unless you play B&M I can't see what expenses you'd have that would be worth the effort.

Don't know about about RRSPs but if I had to say I'm 99% certain you could not contribute to them retroactively. You would gain the contribution room but any contributions would be for future tax years.

lol. for the last time: I am not a troll. 2eazy came in in this thread, and he wasn't a part of the "at least 10 people" I talked about. This isn't speculation: I know that for a fact.

Speaking of 2eazy, has his strategy ever been discussed? He can correct me if I'm wrong but he basically informs the CRA about his earnings from poker somehow and declares they are nontaxable. So its good to have the explanation of how he's living high on record but he likely opens himself up to scrutiny/audits.

As far as I know they have never come back at him to demand that taxes are indeed owed so does that mean anything for the rest of us or do we just chalk it up to them being incompetent?

I don't see the benefit. If you believe funds are not from a taxable source than there is no reason to inform CRA. If you are unsure then you can go to CRA and get an advance ruling on the matter which would be of some value.

With respect to explaining how he is living high CRA does go after people for the occasionally but I think most of these are the result of someone calling the snitch line. CRA seems clueless at finding people on their own. My income has been in the between $8k and 14k per year for the last 14 years yet when it comes time to fill out my ONT-BEN form my rent is about $45,000/year. If that doesn't raise any red flags at CRA I'm not sure what will.

Maybe this Quebec crew has been pissing off too many people and people snitched. It is a reasonable theory I guess.

Or since all the CRA has been doing is asking people for documents, and not giving any feedback for the most part, maybe they are just conducting some sort of study looking at how much they could get or something. Does that make sense?

I find it weird that in most cases I know, all they've been doing is ask for all the documents, and not giving any feedback for 1yr+.

How would they know that all these guys from the Quebec crew are poker players anyways? It seems far more likely that they are just broadly investigating individuals who have 0$ in reported income but high investment income and/or individuals who are making large purchases (thus triggering a red flag). Or of course, as mentioned, the Quebec crew may just have some "haters."

The two sources of law are each on their own reasonably clear, but they are in tension / conflict.

1. The Income Tax Act is clear in that profits from business, including all professional activities, are to be income for tax purposes. This then raises the thorny issue (which can only be resolved by the courts) of what constitutes a gambling activity that is carried on in a sufficiently professional or business-like way to be income.

2. The case law interpreting and applying the statute is equally clear that all gambling activities are strongly presumed to be casual and non-taxable (see Leblanc (2006), Cohen (2011), Radonjic (2013), and many, many earlier cases discussed here: http://ssrn.com/abstract=1971415 )

The challenge for the CRA is that the Tax Court of Canada will ultimately decide on every case in which a taxpayer does not agree with their assessment. If a taxpayer hires a lawyer, their chances of succeeding at the TCC go up significantly (see the research just completed here).

Hi guys,

I am the guy that took CRA to Fed Court and won. I am available for consultations.

I disagree with Henry17, I do not see how, in any way, the CRA could successfully argue that poker winnings are taxable.

If you read my judgment, you will find a couple comments by the judge that strongly implies I would have won in Tax Court as well.

Hey guys,

So I declared my winnings as income ($50K in $2012) last year. It was the first year that I had no other income besides poker so decided to declare it. I really regret doing so now.

I'm undecided as to how I should approach this year. In 2013 I made about the same amount. If I decide to not declare my winnings this year the CRA will probably audit me right? One can't decide that one year he is a professional and the next he is not. Is it worth getting an adjustment done? Or should I just not declare and see how it goes?

I really don't want the hassle of going through an audit with the CRA. Poker will be my sole income in the foreseeable future so I would like to have this sorted out.

Any advice?

I would say its a no brainer. You'll get money back and you'll essentially get immunity from having to worry about it in the future.

Easy -- the ITA clearly states that gambling winnings are considered income from a taxable source when someone is a professional gambler -- this is not open to debate. The only issue is how does one distinguish between a professional and a hobby player.

I assume your are Radonjic? The reason you were successful is that the court determined that you were not engaging in poker as a business -- so that you were not a professional player. I don't remember the details of your decision but in the past this has always been incorrect even though it was favourable to the gambler.

I would also put you as the favorite to be successful but we are talking about two different things. I think professional gamblers will continue to be successful at trial as long as CRA remains incompetent and judges remain mathematically challenged. For most people that is all that matters -- as long as courts keep saying winnings are not income from a taxable source for individuals CRA goes after then that is it. That doesn't change the fact that these decisions are all wrong.

Hi Henry,

Clear your inbox? Waiting since a year to msg you

+11111124546465

Incorrect. When all the cases are consistent, they are correct. Given the lack of specificity in the Income Tax Act and the fact that we have a self-assessing income tax system, it is more reasonable than not to regard the case law as being the prevailing law on the issue.

Of course, you are free to disagree with the outcomes of the cases from a policy perspective. Attacking the intelligence or competence of the administrators of the tax system and also those adjudicating disputes thereunder seems rather puerile.

If I were a judge faced with a gambling tax case now, I think it would be very challenging to counter the accumulated case law to find a poker player taxable.

This isn't a question of law -- every decision takes the time to explicitly state that gambling winnings from a professional gambler are income from a taxable source. They then conclude that the individual before them is not a professional gambler which is a question of fact.

The reason you have consistent outcomes is that CRA uses the same losing argument in every case. CRA continuously attempts to argue that someone is a professional player based on a combination of working backwards from the outcome and an attempt at extrapolation of the player's intent from his behaviour. That wasn't a bad argument to try the first time but once it has been rejected several times that CRA continues to try to be successful using an argument the court has made more than clear is insufficient is incompetence. That doesn't change the fact that it would be easy (although possibly costly) to win one of these cases if CRA presented the argument the court has been telegraphing it needs from day one.

One of my torts exams involved a question where grounding. Students who somehow managed to get into their 20s without knowing what it means to ground something applied the law correctly but got the wrong answer because they didn't understand what they were talking about. This is what is happening here. Every decision shows a lack of understanding about basic probability. The law is being applied correctly but the person applying it does not understand math or gambling.

With respect to CRA I have never had any dealings with them (unrelated to gambling) where I have not walked away thinking the person was incompetent. When it comes to gambling as a business cases they repeatedly advance an argument that they know is a loser hoping for a different outcome. Why would anyone expect that? It hasn't even occurred to them that if you read the decisions the court is telling CRA what it needs to find someone a professional gambler.

Then there is how CRA deals with the gambling evidence. Take the Proline case -- the bettor had an expert testify that given how terrible the payouts on the lottery parleys were it was impossible regardless of skill to be +EV. That is very likely true if we didn't consider that the OLG at the time was publishing locked lines as much as seven days in advance. That completely changes everything but the Leblanc's expert didn't take that into consideration and CRA never caught that. OLG understood what was happening and made changes so that people could not exploit the sports lottery the way the Leblancs had. CRA lost the Leblanc case because they didn't understand sports betting.

There is no accumulated case law to counter -- every single decision explicitly states that winnings by a professional player are income from a taxable source. That in these cases the judge then proceeds to (in some instances) incorrectly decide that the individual before them is not a professional player is a question of fact. These cases don't set any precedent -- at most they give limited insight into what criteria the court considers sufficient to consider someone a professional (or since CRA loses all of them -- what the court considers insufficient). The court makes it very clear what CRA needs to do to be successful and when CRA starts to do that they will start winning these cases -- as long as CRA keeps presenting the losing argument they will keep losing. It is really that simple.

I wasn't around for a few months. There has been PM room available most days since I returned last week.

I wouldn't say it's a no brainer. You run the risk of having the CRA reject your application (even with and knowing the recent ruling) and then you are now faced with a lengthy and possibly costly court battle not to mention that you are now on the CRA's equivalent to a hit list.

I know what you are getting at Henry17, but you are completely wrong.

Can you substantiate that with any kind of reasoning?

No. Because its not in anybodies interest to debate it on a public forum. It would be fun to, but dumb.

Not really.

My position is that CRA:

1) CRA is losing because they are doing it wrong. They could start winning quite easily with a different strategy.

2) All of these cases are of very limited value to people in the future.

His position is that I'm wrong. If he is correct then explaining to me why I'm wrong can cause no harm -- if winnings are not taxable than nothing said here can change that.

It possibly was not that smart of me to say that there is a different strategy that the courts would almost certainly accept but I don't think that is really big news. If I started going down the road of how to win a poker case that would probably be dumb -- not that I think anyone is monitoring this but still.

People who claim that poker winnings (especially online players) can't be taxed are just wishful thinking -- I don't expect it to happen in the near future (unless they get a perfect situation) but eventually it will happen.

Randizzle is within the 3 year time frame for filing an adjustment. There's no need to go to court. Radonjic went to court because he was filing an adjustment more than 3 years after receiving his assessment, and the CRA refused to give it a proper review. The judge ruled that they must review his case, and when they did, his adjustment was accepted.

If they reject Randizzle's adjustment, he'll just have to pay the taxes he's going to have to pay anyway.