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Old 11-29-2014, 10:56 PM   #2601
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Re: Canadian Online Poker Tax Thread

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Originally Posted by Mossberg View Post
Would it be necessary for the CRA to get that information on their own? Would the CRA not be able to just request that the player gives them access to his/her PT/HEM etc?
It would be up to CRA to acquire the data and they can compel you to provide records but there are limits on that and I don't know enough about that process.

For the sake of poker I doubt that CRA would attempt to proceed without having the ability to get records from the sites themselves. That is why on the news of PokerStars becoming a Canadian company one of the first things that occurred to me is the consequences of that on tax cases.

Something to take note of is that it is common practise for CRA to request documents that they can not compel you to handover. They ask anyway hoping people won't know any better since even though they can't compel them -- if you foolishly hand them over voluntarily CRA can use them.

The reason CRA's request overreach is important is that it could be something that would happen during a lifestyle assessment. CRA has the ability to just assign an income to you without any need to determine the source -- it could be poker, it could be working for cash, it could be selling coke makes no difference. CRA only has to establish you can't afford your life on your reported income. Once they do that the onus switches to the individual to establish that either CRA's assessment is wrong or that the difference comes from a non-taxable source. For most poker players who have done nothing to prepare for this the obvious answer is to say it is from casual poker play. The burden of proof is balance of probabilities which is really low so you should be able to establish it with bank statements showing the funds. This is where you need to be careful about how much information you give over to CRA. You have to provide enough that you can establish that you won at poker but nothing more. You don't want to help them should they decide to proceed with a professional player case. They might be able to compel you to hand over information regardless but I wouldn't want to do it voluntarily because they simply asked.

I also don't work as a tax lawyer although I did take an unusually high number of tax courses in law school and have had a very vested interest in this topic for 15-16 years.
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Old 12-01-2014, 01:48 AM   #2602
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Re: Canadian Online Poker Tax Thread

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From my understanding, which is largely limited to TaxGuru's work, and reading related cases, it seems that there is precedent for what can be said to not be a business. I guess that's where I'm stuck.

There seems to be a lot of existing case work that carves out specific attempts at claiming the business nature of poker playing to be faulty. It seems that you're saying that these ideas could be overruled in a future case? How difficult would it be to claim someone's poker playing is a business and win when it goes against existing cases?

In all of the speculation I've read as to what constitutes a potential business of playing poker, I have not heard an actual hypothetical solution to what this could look like.

When I read TaxGuru's work, it sounds like he believes that to be in the business of gambling requires something extreme, such as a bot farm like you mention. His work seems to indicate the belief that an individual playing poker is not a business in and of itself until/unless there is a mystical "something else" that results in an extreme risk reduction for the person playing.

And then I read Henry17's work, and it makes no sense to me. He seems to be claiming that poker is simply taxable, and that as the law is written I and anyone else playing poker are in the business of poker. Though I have a hard time accepting what he says because he seems to lack a fundamental understanding that the arguments he puts forward about what would make a poker player in the business of gambling also apply at the same time to all recreational players.

In essence, his argument that all poker is a business activity (at least, it sounds like that's what his stance is when he plainly says "poker is taxable") would result in the ability to declare seemingly illegitimate write-offs. I question his intent with such a stance.

On a personal note, Henry17 has bothered me by attacking me personally, and also before I came on here by calling everyone who pays taxes for poker a fool. This is insulting to myself, my friends, and colleagues. So I guess I was a bit upset with him already before we really started interacting.

From my understanding, it seems that the framework for determining what constitutes a business of gambling must work both ways. What I mean by that is that if reasons a, b, c are used to pin me as in the business of gambling, then it also means that anyone else who can legitimately claim reasons a, b, c would also be in the business of gambling. Though that seems at odds with the case-by-case basis of this.

I'm looking for a hypothetical solution that makes sense.

What would it look like for a person to be playing poker full time and be without a doubt taxable? And not taxable?

What are the reasons for knowing they're taxable?

What does the other side of those people look like? What I mean is, take those reasons, and then what does it look like to see the people that get to claim tax write-offs for their poker playing being a legitimate business regardless of whether or not they have an expectation of profit?

Sigh.

In my mind this makes sense, but I'm out of my depth in communicating through the language of law.

I guess my fear is that I will be in the right, but that the CRA will just decide to rule against me. It doesn't seem fair that I should even have to consider that my government may effectively keep a large amount of money that I'm entitled to, and be able to do it all on a whim.
Henry is saying that in theory, poker is a business, but the CRA has never brought an example forward and figured out a way to argue it, so effectively it's not a business.

I'm saying that a future case could certainly overturn the case law because up to this point, the CRA has never brought forward an example of a poker player operating as a business and argued it properly. But that doesn't mean that there isn't one out there.

That's the fun thing about stare decisis. You can have what appears to be the same situation, and all you have to do is distinguish your case from the case law on just one material fact and then it's wild blue yonder.

This happens in novel cases. That's what makes them exciting for lawyers. 5 years ago Dunsmuir basically overturned 150 years of administrative law in one swoop. Crazy ****. Maybe that will happen for poker players, and the longer the CRA keeps trying to get someone, the more likely it is that it will eventually happen.

If I were you I'd play it conservatively - assuming you're not like Cohen or any other example. Either pay or invest in liquid low risk securities.

But obviously consult a professional in whose advice you can take reliance.
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Old 12-01-2014, 11:14 AM   #2603
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Re: Canadian Online Poker Tax Thread

It is even easier than that. The decisions set out what CRA needs to do so it wouldn't be overturning previous case law.

The current situation is that the courts have said repeatedly that CRA needs to establish A + B + C and they will win. CRA keeps establishing A + B and not doing C so they keep losing. If CRA decides to do C they will be successful -- the court has been very clear on that.

CRA doesn't want to put in the effort to establish C because it is difficult and expensive so they just keep arguing A + B.

Going forward there are three options.

1) CRA will just give up. There is absolutely no point in arguing poker cases with just A + B as the courts have made it clear that is insufficient.

2) CRA will argue A + B and supplement it with a statistics based argument that A + B should be sufficient for the courts. CRA has never done this. It might work / it might not. I think it should but I don't expect a court would agree.

3) CRA will attempt to argue C. If they were going to do something like this they would probably be better off targeting a short-stacker as that method of play would make establishing C really easy. Reality is it can be done for any type of play. Everyone has a system and all systems can be extracted from data with varying degrees of difficulty.

In theory there is a 4th option and that would be CRA keeps arguing just A + B and keeps losing but that doesn't seem like a good plan. The more often they lose the more it creates a reasonable argument for players to say they had a good faith belief that gambling income was not taxable.

My expectation is that CRA goes with option #1. If you look at the past cases most of them were forced on CRA either because the gambler was front page news after a stripper stole $100k or they ran a business where there is an industry tendency towards unreported cash transactions and it was during a lifestyle investigation that poker was revealed. You don't really see CRA putting a lot of effort into hunting down gamblers. Allowing professional gamblers to get away without paying income tax is a really small leak compared to donated art scams or HST scams. Guarantee that at the peak of the HST scam people were scamming more in a few weeks than all income tax payable on poker winnings combined.
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Old 12-01-2014, 02:18 PM   #2604
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Re: Canadian Online Poker Tax Thread

Henry17... the thing is CRA might be forced into your 4th option because of their own doing. If they continue to not give tax-paying poker players their money back, poker players will continue to take them to Court and win.
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Old 12-01-2014, 02:47 PM   #2605
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Re: Canadian Online Poker Tax Thread

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It is even easier than that. The decisions set out what CRA needs to do so it wouldn't be overturning previous case law.

The current situation is that the courts have said repeatedly that CRA needs to establish A + B + C and they will win. CRA keeps establishing A + B and not doing C so they keep losing. If CRA decides to do C they will be successful -- the court has been very clear on that.

CRA doesn't want to put in the effort to establish C because it is difficult and expensive so they just keep arguing A + B.

Going forward there are three options.

1) CRA will just give up. There is absolutely no point in arguing poker cases with just A + B as the courts have made it clear that is insufficient.

2) CRA will argue A + B and supplement it with a statistics based argument that A + B should be sufficient for the courts. CRA has never done this. It might work / it might not. I think it should but I don't expect a court would agree.

3) CRA will attempt to argue C. If they were going to do something like this they would probably be better off targeting a short-stacker as that method of play would make establishing C really easy. Reality is it can be done for any type of play. Everyone has a system and all systems can be extracted from data with varying degrees of difficulty.

In theory there is a 4th option and that would be CRA keeps arguing just A + B and keeps losing but that doesn't seem like a good plan. The more often they lose the more it creates a reasonable argument for players to say they had a good faith belief that gambling income was not taxable.

My expectation is that CRA goes with option #1. If you look at the past cases most of them were forced on CRA either because the gambler was front page news after a stripper stole $100k or they ran a business where there is an industry tendency towards unreported cash transactions and it was during a lifestyle investigation that poker was revealed. You don't really see CRA putting a lot of effort into hunting down gamblers. Allowing professional gamblers to get away without paying income tax is a really small leak compared to donated art scams or HST scams. Guarantee that at the peak of the HST scam people were scamming more in a few weeks than all income tax payable on poker winnings combined.
This is a much better articulated version of what I was trying to say - and absolutely my word choice of "overturned" was bad.
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Old 12-01-2014, 02:48 PM   #2606
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Re: Canadian Online Poker Tax Thread

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Henry17... the thing is CRA might be forced into your 4th option because of their own doing. If they continue to not give tax-paying poker players their money back, poker players will continue to take them to Court and win.
I wouldn't put it past the CRA to just hope a bunch of players don't file for adjustments on taxes already paid.
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Old 12-01-2014, 03:01 PM   #2607
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Re: Canadian Online Poker Tax Thread

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Henry is saying that in theory, poker is a business, but the CRA has never brought an example forward and figured out a way to argue it, so effectively it's not a business.

I'm saying that a future case could certainly overturn the case law because up to this point, the CRA has never brought forward an example of a poker player operating as a business and argued it properly. But that doesn't mean that there isn't one out there.

That's the fun thing about stare decisis. You can have what appears to be the same situation, and all you have to do is distinguish your case from the case law on just one material fact and then it's wild blue yonder.

This happens in novel cases. That's what makes them exciting for lawyers. 5 years ago Dunsmuir basically overturned 150 years of administrative law in one swoop. Crazy ****. Maybe that will happen for poker players, and the longer the CRA keeps trying to get someone, the more likely it is that it will eventually happen.

If I were you I'd play it conservatively - assuming you're not like Cohen or any other example. Either pay or invest in liquid low risk securities.

But obviously consult a professional in whose advice you can take reliance.
For the record, I have sought legal advice which resulted in me paying taxes in the past, and has led me to re-file back in March. I'm currently in the process of being audited.

What you say is here is really interesting to me. I've always thought of the law as something that is immutable, true, and absolute. And now, I'm forced to reconsider that position. The reason for that is that it seems impossible for me to ever know "for sure" whether or not the law says I'm taxable. Here's what I mean by that.

The CRA could give me a green light, accept my adjustments, and yet only be doing it because they don't think they could win in court.

I could go to court and win or lose, and have future rulings cast doubt on whether or not the judgment was the "right" one.

There is no way that someone or something external to me can say for sure what the absolute right answer is in my case. I can only get an opinion.

This is actually very freeing in a way. It means I'm no longer going to look for an absolute of what the law's interpretation is in an instance like this where it is ambiguous and open to interpretation. Rather, I will follow the advice of my lawyer who I trust to know this aspect of my life better than I do.

Having said that, I'm more certain than ever that my poker playing wasn't supposed to be taxable
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Old 12-01-2014, 03:24 PM   #2608
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Re: Canadian Online Poker Tax Thread

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For the record, I have sought legal advice which resulted in me paying taxes in the past, and has led me to re-file back in March. I'm currently in the process of being audited.

What you say is here is really interesting to me. I've always thought of the law as something that is immutable, true, and absolute. And now, I'm forced to reconsider that position. The reason for that is that it seems impossible for me to ever know "for sure" whether or not the law says I'm taxable. Here's what I mean by that.

The CRA could give me a green light, accept my adjustments, and yet only be doing it because they don't think they could win in court.

I could go to court and win or lose, and have future rulings cast doubt on whether or not the judgment was the "right" one.

There is no way that someone or something external to me can say for sure what the absolute right answer is in my case. I can only get an opinion.

This is actually very freeing in a way. It means I'm no longer going to look for an absolute of what the law's interpretation is in an instance like this where it is ambiguous and open to interpretation. Rather, I will follow the advice of my lawyer who I trust to know this aspect of my life better than I do.

Having said that, I'm more certain than ever that my poker playing wasn't supposed to be taxable
Congratulations, you are now the type of client that lawyers dream about. Aware of the rules, but understand that they are not absolute unless all of the material facts directly apply to your case.

Statutes are just parliament's way of trying to codify the decisions that judges make that the government likes. Case law is judges either interpreting statutes or trying to follow the principles of previous decisions. So it's rarely written in stone, especially in more complex issues. Paying taxes on the purchase of a book is relatively simple. You bought the book, every non-exempt good is taxable. You're paying that 13%. Taxation of poker as a "business" is way harder and involves way more material issues.

And you are exactly correct as to why lawyers give "advice" and "opinions", as opposed to "direction" and "orders".

Because law is hard and lawyers recognize that it's not absolute and it's harder than it appears.

Last edited by Gamblor; 12-01-2014 at 03:29 PM.
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Old 12-01-2014, 03:37 PM   #2609
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Re: Canadian Online Poker Tax Thread

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Congratulations, you are now the type of client that lawyers dream about. Aware of the rules, but understand that they are not absolute unless all of the material facts directly apply to your case.

Statutes are just parliament's way of trying to codify the decisions that judges make that the government likes. Case law is judges either interpreting statutes or trying to follow the principles of previous decisions. So it's rarely written in stone, especially in more complex issues. Paying taxes on the purchase of a book is relatively simple. You bought the book, every non-exempt good is taxable. You're paying that 13%. Taxation of poker as a "business" is way harder and involves way more material issues.

And you are exactly correct as to why lawyers give "advice" and "opinions", as opposed to "direction" and "orders".

Because law is hard and lawyers recognize that it's not absolute and it's harder than it appears.
Thanks, I really appreciate your help with this.

Though I'm not sure how to feel about being called a fish...
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Old 12-01-2014, 03:49 PM   #2610
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Re: Canadian Online Poker Tax Thread

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Henry17... the thing is CRA might be forced into your 4th option because of their own doing. If they continue to not give tax-paying poker players their money back, poker players will continue to take them to Court and win.
If people ask to restate their previous tax returns to remove income from poker winnings and CRA denies the adjustment they would end up at judicial review like you did. Those kind of decisions are meaningless as far as tax law is concerned. The only issue at stake is the reasonableness of CRA's refusal to allow the adjustment. They have absolutely no bearing on the tax liability of the individual. CRA can lose (and they will lose 100% of the time) and be forced to allow the adjustment and instantly turn around and go after the individual for the winnings they were allowed to remove in the adjustment.

If there is a significant number of money involved then people seeking adjustments that would increase the likelihood that CRA would seek out a perfect case. The adjustment process would also give them a good starting point in picking which player's are the best candidates. If someone is seeking an adjustment they should be very careful in what information they disclose.
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Old 12-01-2014, 03:55 PM   #2611
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Re: Canadian Online Poker Tax Thread

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Thanks, I really appreciate your help with this.

Though I'm not sure how to feel about being called a fish...
Don't worry, the Rules of Professional Responsibility do pretty well at preventing us from taking advantage of the fish.
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Old 12-01-2014, 04:28 PM   #2612
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Re: Canadian Online Poker Tax Thread

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If people ask to restate their previous tax returns to remove income from poker winnings and CRA denies the adjustment they would end up at judicial review like you did. Those kind of decisions are meaningless as far as tax law is concerned. The only issue at stake is the reasonableness of CRA's refusal to allow the adjustment. They have absolutely no bearing on the tax liability of the individual. CRA can lose (and they will lose 100% of the time) and be forced to allow the adjustment and instantly turn around and go after the individual for the winnings they were allowed to remove in the adjustment.

If there is a significant number of money involved then people seeking adjustments that would increase the likelihood that CRA would seek out a perfect case. The adjustment process would also give them a good starting point in picking which player's are the best candidates. If someone is seeking an adjustment they should be very careful in what information they disclose.
I believe you are taking a simplistic view of my case. I understand that I have a better understanding of the judgment because I participated and thus I am able to read between the lines in the Judgment. It is crazy to see what is said in the judgment and compare to what was actually argued in Court during the judicial review.

Yes, it was an "admin" case and not a "tax" case on it's surface. But if you look at it in more depth, it's actually very relevant because the judge was evaluating the CRA's tax argument and dismissed it as unreasonable - that is, an argument that has 0% chance of winning in tax court. If the CRA's position was wrong but at least could theoretically win in Tax Court, they would have won in my case. The judge alludes to me being able to win in Tax Court twice in my judgment.

Last edited by Equal; 12-01-2014 at 04:35 PM.
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Old 12-01-2014, 04:34 PM   #2613
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Re: Canadian Online Poker Tax Thread

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If people ask to restate their previous tax returns to remove income from poker winnings and CRA denies the adjustment they would end up at judicial review like you did. Those kind of decisions are meaningless as far as tax law is concerned.
Yes, but no. In my case I made a tax-law argument to the CRA first, and that was the basis of discussion with the CRA until Fed court where the DOJ lawyers argued reasonableness. And then in Court I had to shift my arguments on that basis.

IMO, I believe for poker players it is an easier win in Tax Court than in Fed Court because of this.

The CRA is a bureaucracy that exists to make money, like any other profit-driven corporation. Like any other big corporation, they have employees that are overwhelmed with work and can not possibly know all the ins-and-outs of the job. They likely have near-zero capability of constructing a meaningful defense on this topic, and that's why they continue to advance the same arguments against every poker player. Because every CRA employee that first encounters this situation has to start from scratch and draws from the same mis-leading CRA documentation, which is based on CRA opinion and not on the ONLY THING THAT MATTERS - previous Court judgments.
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Old 12-01-2014, 04:36 PM   #2614
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Re: Canadian Online Poker Tax Thread

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I believe you are taking a simplistic view of my case. I understand that I have a better understanding of the judgment because I participated and thus I am able to read between the lines in the Judgment. It is crazy to see what is said in the judgment and compare to what was actually argued in Court during the judicial review.

Yes, it was an "admin" case and not a "tax" case on it's surface. But if you look at it in more depth, it's actually very relevant because the judge was evaluating the CRA's tax argument and dismissed it as unreasonable - that is, an argument that has 0% chance of winning in tax court. If the CRA's position was wrong, but at least could theoretically win in Tax Court, they would have won in my case. The judge alludes to me being able to win in Tax Court twice in my judgment.
That's okay, and the judge's opinion may even have suggestive value to the tax court (may), but youre missing a fundamental point. FCA rulings are not precedential for the Tax Court, meaning the TCC is not obligated to follow previous decisions in the FCA where the issue is not the same (i.e. admin vs. tax). In other words, the judge's comments in the decision - or indeed, in the courtroom - may as well be obiter.

A large part of this is because the judge may not he had the requisite Tax expertise. Maybe he did, but he didn't need to have it.

As I said a while ago, tax law is a unique beast in many respects.
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Old 12-01-2014, 06:06 PM   #2615
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Re: Canadian Online Poker Tax Thread

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, it's actually very relevant because the judge was evaluating the CRA's tax argument and dismissed it as unreasonable - that is, an argument that has 0% chance of winning in tax court.
The decision doesn't actually say that. If you think it does you are misreading it. That being said eve if it did it would still be meaningless.

1) CRA used A+B to defend their decision to refuse the adjustment. We all agree that the A+B argument will likely lose. That doesn't mean CRA is limited to A+B should they decide to take you to tax court.

2) Even if the judge had said A+B+C would lose his opinion would carry no weight in tax court.

[quote ] If the CRA's position was wrong, but at least could theoretically win in Tax Court, they would have won in my case. [/quote]

That is incorrect -- in fact it is the exact opposite. CRA would not be successful in denying an adjustment request except in situations where there is little doubt of CRA's position. If there is doubt CRA has to allow the adjustment even when they are likely to be successful in tax court. The adjustment should always be allowed and questions settled in tax court except where the chances of the taxpayer being successful are so low that it would be considered a waste of the court's time.

Quote:
The judge alludes to me being able to win in Tax Court twice in my judgment.
I do not remember that but even if we assume the judge implied CRA would lose in tax court it is still meaningless. If he did express that opinion it would be based on the argument CRA presented but CRA is not limited to using the same argument in tax court. They could use a revised or completely different argument and obviously the judge can not give an opinion that.

The second issue is that law is specialized. I wouldn't put much confidence in a non-tax judge's opinion even if he gave it directly. In this particular instance it carries no legal weight but beyond that the opinion is based on the research of clerks who most likely never took a single tax course. Tax law is not like criminal, contracts, constitutional, or torts where everyone who has gone to law school can speak with a certain level of confidence on the subject. I would say tax is either the most complex or second most complex specialty and even among people who do tax law the gambling taxation question is a really obscure question.
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Old 12-02-2014, 03:16 PM   #2616
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Re: Canadian Online Poker Tax Thread

For those of you that have received requested adjustments, what did the CRA accept as evidence of gambling winnings?
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Old 12-02-2014, 08:00 PM   #2617
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Re: Canadian Online Poker Tax Thread

This is a quote from a recent PokerStars e-mail that I thought some of you would find interesting.

"PokerStars is owned and operated by a legal entity located in the Isle Of Man (a crown dependency of the United Kingdom)"

I guess Amaya hasn't interrupted their place of residence...
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Old 12-03-2014, 12:54 AM   #2618
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Re: Canadian Online Poker Tax Thread

Interesting comments Gamblor and Henry17. I appreciate your contributions.
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Old 12-03-2014, 01:06 AM   #2619
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Re: Canadian Online Poker Tax Thread

Here is a list of the relevant jurisprudence applicable:

Cases
• Balanko v. M.N.R., 81 DTC 887 - Justice Collier “all gamblers have an intention to win”
• Bélec v. The Queen, 95 DTC 121, 123 - “if you lose money then you can’t deduct, if you win money then you are in business”
• Cohen v. The Queen, 2011 TCC 262
• Dowling v. Canada, 1996, TCJ 301 - golfer/poker player taxable at golf, provable skill
• Epel v. The Queen, 2003 TCC 707 – winning poker player
• Leblanc v. The Queen, 2006 TCC 680 - 15 employees, negotiated business deals – Justice Bowman dismissed the CRA argument of “since you won you must have had a system and thus a business. If you lost, no system and no business and no losses/expenses can be claimed) logical fallacy post hoc ergo propter hoc
• Luprypa v. Canada, [1997] TCJ No. 469 – billiards player that played drunks
• Markowitz v. M.N.R., 64 DTC 397 - horse bettor that needed to keep records to prove winnings not from taxable source
• Morden v. MNR 1961, operated horse racing stable bets on horses, not taxable, hobby implies no expectation of profit
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Old 12-05-2014, 09:58 PM   #2620
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Re: Canadian Online Poker Tax Thread

We are probably just a few years (and a two or three more judgments) away from sidelining all debate on this topic.
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Old 12-09-2014, 04:01 PM   #2621
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Re: Canadian Online Poker Tax Thread

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We are probably just a few years (and a two or three more judgments) away from sidelining all debate on this topic.
Thinking more about this, one thing that is bothering me is that all of the judgments so far have related to deducting "business" losses.

And we've been assuming that if a court won't allow deductions/adjustments for losses, that it would not treat poker as a business and therefore it was not taxable income.

But it's easy to show that a losing year does not mean there was a business. But winnings over several consecutive years might distinguish that from the previous cases.

Sustaining losses over a long period of time makes it very difficult to "stay in business" if there is no other income source, but sustaining winnings certainly doesn't. I don't think the TCC would have a problem turning around and saying poker income is taxable if it provides sustained profits and is the sole means of income. At that point, the court might say there is now a REOP and it is no longer a personal endeavour.

I don't know if this argument has been made itt, but it wouldn't surprise me if that was the final outcome.
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Old 12-09-2014, 05:04 PM   #2622
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by Gamblor View Post
Thinking more about this, one thing that is bothering me is that all of the judgments so far have related to deducting "business" losses.

And we've been assuming that if a court won't allow deductions/adjustments for losses, that it would not treat poker as a business and therefore it was not taxable income.

But it's easy to show that a losing year does not mean there was a business. But winnings over several consecutive years might distinguish that from the previous cases.

Sustaining losses over a long period of time makes it very difficult to "stay in business" if there is no other income source, but sustaining winnings certainly doesn't. I don't think the TCC would have a problem turning around and saying poker income is taxable if it provides sustained profits and is the sole means of income. At that point, the court might say there is now a REOP and it is no longer a personal endeavour.

I don't know if this argument has been made itt, but it wouldn't surprise me if that was the final outcome.
Um... Leblanc?
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Old 12-09-2014, 06:09 PM   #2623
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Re: Canadian Online Poker Tax Thread

Leblanc doesn't say that consistent winning is insufficient.

CRA would have been successful in Leblanc except for the testimony of Professor Smith who testified that given that Pro-line requires a minimum of a three team parlay it is impossible for Leblanc to have an advantage.

Quote:
so overwhelming, professional gamblers do not play parlay bets, which
they call ěsucker betsî
In fact the judge makes uses that they were forced to bet parlays to distinguish from other forms of gamblers who would be considered running a business and in that list he includes poker players.

This decision was incorrectly decided because of Professor Smith's testimony. Either intentionally or because as an expert witness he really didn't understand sports wagering his analysis never took into account that while Pro-line players were required to bet 3 team parlays those parlays were composed of bets with odds that were set and fixed for the entire week. This is a very different situation than betting 3-team parlays at a sportsbook / bookie. Professor Smith's expert testimony was incorrect but CRA did not challenge it with their own experts so the incorrect expert testimony mislead the judge into making the wrong decision.

Even if CRA did not understand the situation OLG did and because of the Leblancs they changed the structure of Pro-line so that betters could no longer use their system. They didn't end up paying income tax but they were done as gamblers. It is actually a good thing that they won since the amount that they claimed to have won was at least double what they actually won and most of the money had gone to the girls at Pigale so I'd be surprised if they could afford to pay the tax bill if they had lost.
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Old 12-10-2014, 03:51 AM   #2624
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by Gamblor View Post
Thinking more about this, one thing that is bothering me is that all of the judgments so far have related to deducting "business" losses.

And we've been assuming that if a court won't allow deductions/adjustments for losses, that it would not treat poker as a business and therefore it was not taxable income.

But it's easy to show that a losing year does not mean there was a business. But winnings over several consecutive years might distinguish that from the previous cases.

Sustaining losses over a long period of time makes it very difficult to "stay in business" if there is no other income source, but sustaining winnings certainly doesn't. I don't think the TCC would have a problem turning around and saying poker income is taxable if it provides sustained profits and is the sole means of income. At that point, the court might say there is now a REOP and it is no longer a personal endeavour.

I don't know if this argument has been made itt, but it wouldn't surprise me if that was the final outcome.
Yes, this has been considered in various points in the various judgments I listed above, plus Alarie covers it well in his document.
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Old 12-10-2014, 03:00 PM   #2625
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by Equal View Post
Yes, this has been considered in various points in the various judgments I listed above, plus Alarie covers it well in his document.
Right. I just thought it was a salient point that hasn't been given much attention itt.
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