Originally Posted by TorontoCFE
I would declare it only if I had no other source of income and it was over 100k for the year. If you are in that situation , you are more likely to get noticed (especially if you used to have ajob and file returns) and have less case for it being a hobby.
I would incorporate if I was consistantly over 100k and pay myself a salary sufficient to max an RRSP. The balance of the profits I would loan from the corporation to myself at current market rates.
I would lease a car in the corporation name and use it to travel to play.
I'd take advantage of every deduction I could.
If you do this, then you could keep your tax bill to 20k at most and
fulfill all legal obligations.
How would you manage to keep your tax bill at 20K at most? I have been considering the idea of incorporating however my accountant advised against it.
As I understood it If I were to make 100K this year from online poker I would be taxed at the rate of 18% (the current corporate rate)
However If I were to pay myself a salary of say $30K/year I would be taxed $4,435.44 on that $30k (both Federal and Provincial combined)
The leaves 70K that would be taxed at 18%. That leaves about $57,400. The problem is how do I ever use/access that $57k?? It's basicly inaccessible because as I understood it If I ever spent it, it would become salary and then it would be taxed again at the personal income tax rates which defeats the whole purpose of incorporationg to begin with.
There isn't a whole lot of deductions an Online Poker Pro can make unless you want to start claiming expenses that are not really expenses.
Sure you can claim a car but how do you justify it when your commute is from your bedroom to your basement?
I can already deduct part of my morgate, property taxes, utilities etc without having to incorporate
Can you elaborate more on lending yourself money from the corporation?
Is this not taxable? Does it not have to be paid back?