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Old 05-26-2008, 06:47 PM   #476
NL__Fool
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Re: Canadian Online Poker Tax Thread

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I have no idea how to add a poll but I'd be interested in knowing how many people actually choose to be upstanding citizens and declared their income.
I do and have done so for the past 4 years. Poker is my only source of income.

For those intersted, in Canada we don't have to pay EI but we do take a double hit on CPP contributions, we have to pay both the employee portion and the Employer portion as we are considered "running a business"

CPP contribuions last year capped out at $1,900 but I had to pay $3,800 because I had to pay employee and employer portions. This year they cap out at $2,029 i believe

Also, for 3 years I just paid all my taxes in 1 lump sum by the filing deadline in the following year but this year they are makig me pay in quarterly installments my "estimated income tax" based on the previous years return.
2008 taxes will be adjusted in 2009 So if I overpaid I get a refund if I underpaid I will owe money.

As a poker pro playing making a living playing solely online, I have very few dedcutions. Basicly I can deduct a portion of my Utilities, property taxes, morgatge interst and other household expenses such as internet.

My income for 2007 was pretty high and I had a whopping $3,800 worth of "expenses i could deduct" no matter how reasonably creative my accountant and I could get.
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Old 05-26-2008, 07:01 PM   #477
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Re: Canadian Online Poker Tax Thread

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The fact that he went out and got a bunch of flow-thoughs kind of negates the first paragraph. There would be no need to do that if he actually believed that he was exempt from income tax. He got opinions from lawyers to create a good faith argument that he didn't need to pay tax. His hope would be that if CRA comes after him he can use that to argue that it wasn't tax evasion. If he actually wanted a definitive answer he could have asked CRA for an advance ruling.
I have talked to countles tax attorney's, (probably 25 +) and spend thousands trying to get some form of documentation from anyone of them saying in "their opinion poker winnings are not taxable" so I could in effect stop declaring my poker income and stop paying taxes. I have failed miserably and I have been unable to find a single one.

If someone could find me a tax attorney that will state this and provide me me with a notarized letter from that tax attorney stating their opinion I would gladly pay them a hefty sum. I will offer $5K finders fee right now to someone who can find this for me, let's call it the $5K challenge.


The sole reason being In the event I was ever audited and it was ruled that I owed income tax in those unfiled years I could pop out that letter and not be charged with tax evasion and be liable for the HEFTY PENALTIES AND INTEREST that I would have been acountable for that comes with being charged with tax evasion.

If I had a letter like that, best case scenario: I stop filing and possibly never have to pay income tax again for as long as I live. Worst case scenario: I stop filing, get autided 5 years later and have to pay the back taxes with no penalties in which case, I pay the back taxes and the 150-200K I have saved over the past 5 years by not filing taxes will have made me at least $50-70K in interset in investments made over the years

Theres nothing like owing 100K in unfiled back taxes for 3 years then getting an additional $200K added on top because of penalties and interest. i don't think a lot of people understand have severe the penaltiess can be if you are charged with tax evasion.

A letter like the one I asked for above would be worth it's weight in gold to me. Hence my search and hoping I will find just 1 who believes it is not taxable and will provide me with a good faith arguement to the CRA

As for Marc karams post I call BS on his statement. if he has the 3 top tax attorneys saying he does not have to pay income tax why doesn't he just not file?

Why does he need to play it safe?

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Old 05-26-2008, 07:17 PM   #478
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Re: Canadian Online Poker Tax Thread

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property taxes, morgatge interst
I'm not sure if that is worth it. If I'm not mistaken by using your home as an office and deducting it as an expense you forfeit the primary residency capital gains exemption.

Quote:
I have failed miserably and I have been unable to find a single one.
Like I said before you'll never find one. I'd be interested in which 3 lawyers Karams consulted. My law school was very tax-centric (it is actually the only law school in Ontario where income tax law is mandatory) and all my friends from law school agree I should be paying tax including one guy who actually clerked at the Tax Court.
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Old 05-26-2008, 08:12 PM   #479
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Re: Canadian Online Poker Tax Thread

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I'm not sure if that is worth it. If I'm not mistaken by using your home as an office and deducting it as an expense you forfeit the primary residency capital gains exemption.
That's what I thought as well but according to my accountant because the space I use is so small % wise compared to the size of my house I do not lose the capital gains excemption. it has to exceed a certian % for me to lose that excemption
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Old 05-26-2008, 11:02 PM   #480
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Re: Canadian Online Poker Tax Thread

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That's what I thought as well but according to my accountant because the space I use is so small % wise compared to the size of my house I do not lose the capital gains excemption. it has to exceed a certian % for me to lose that excemption
What % are using? I was think of using 1/3 of my house, but don't want to be subject to capital gains. Do you know what the maxium % is?
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Old 05-26-2008, 11:17 PM   #481
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Re: Canadian Online Poker Tax Thread

http://www.cra-arc.gc.ca/tax/busines...es/home-e.html
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Old 05-28-2008, 08:35 AM   #482
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Re: Canadian Online Poker Tax Thread

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Originally Posted by NL__Fool View Post
If someone could find me a tax attorney that will state this and provide me me with a notarized letter from that tax attorney stating their opinion I would gladly pay them a hefty sum. I will offer $5K finders fee right now to someone who can find this for me, let's call it the $5K challenge.
I have no doubt that there are situations where you can credibly argue that you shouldn't be taxable and I know I can make a good argument in certain cases. It really depends on the facts of the individual situation.

If poker is your only form of income though then you are pretty much out of luck.
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Old 05-28-2008, 12:45 PM   #483
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Re: Canadian Online Poker Tax Thread

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I have no doubt that there are situations where you can credibly argue that you shouldn't be taxable and I know I can make a good argument in certain cases. It really depends on the facts of the individual situation.

If poker is your only form of income though then you are pretty much out of luck.
There are people who have reported finding this exact situation though...
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Old 05-28-2008, 12:47 PM   #484
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Re: Canadian Online Poker Tax Thread

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There are people who have reported finding this exact situation though...
There is one person who reports this yet then chooses to act as if it wasn't true.
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Old 05-28-2008, 05:22 PM   #485
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Re: Canadian Online Poker Tax Thread

If somebody plays and transfer some money to someone who works fulltime (say $1000 a month) and the person that works full time cashes the $1000 a month check. Would that person ever have to pay tax on the $1000 a month?
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Old 05-28-2008, 05:36 PM   #486
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Re: Canadian Online Poker Tax Thread

If I understand correctly A plays and wins $12k a year which he either transfers to B's account to cash out or more likely A actually plays as B. Either way the cash come from the poker site to B who then gives it to A.

B does not owe any income tax because he has not earned any income. That being said if B was ever audited and the $12k detected the onus would be on B to establish it was not income and that B was simply acting as a intermediary. A though would be subject to the normal tax issues that are associated with poker.

B is not off the hook completely though. Assuming that B could establish that the income was A's there would still be the issue of why is this unnecessarily complex structure set up. If it was to assist A in hiding income then B could still get in trouble.
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Old 05-28-2008, 06:01 PM   #487
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Re: Canadian Online Poker Tax Thread

To sum it up. If a person has a fulltime job outside of poker, and makes a $1000 a month from online poker. Do they have to pay income taxes on it?
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Old 05-28-2008, 06:06 PM   #488
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Re: Canadian Online Poker Tax Thread

Yes if they are classified as a pro. Having a FT job doesn't change anything. The test for if you are a professional or a hobbyist is the same. The FT job just means it is easier to get away with not declaring it but it has no impact on whether the poker winnings are income or not.
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Old 05-28-2008, 06:18 PM   #489
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Re: Canadian Online Poker Tax Thread

Does anyone know what the tax rate in Ontario for small business earning under $400k? I read the CRA website and says federal rate is 11%, but I can't find anything for the ontario rate? Is it the same 6.05% for under $38k like the personal income tax?
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Old 05-28-2008, 07:24 PM   #490
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Re: Canadian Online Poker Tax Thread

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The test for if you are a professional or a hobbyist is the same. .
what are the more importants points ?
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Old 05-28-2008, 07:36 PM   #491
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Re: Canadian Online Poker Tax Thread

The two main criteria is reasonable expectation of profit and the use of a skill or special knowledge. The minor elements are frequency and how organized you are.
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Old 05-28-2008, 08:31 PM   #492
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Re: Canadian Online Poker Tax Thread

Henry, last year a made about 30 K playing low and micro stakes and I was thinking that I should ask an advance ruling, but most of the time, do you think its a waste of time and money and should I just pay right now??

the fact that I wasnt playing mid or high stakes changes anything??


the fact that I had 2 great months where I won about 10K each and the rest of the year was not so great could help me with the first criteria ?

well, at least i wont have to pay for the few thousands i made in the sn freeroll, tourney are just about luck right ?
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Old 05-28-2008, 09:07 PM   #493
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Re: Canadian Online Poker Tax Thread

I have no idea if anyone has ever asked for an advanced ruling on this. I believe the cost is $530 which covers 5 hours. The hourly rate is $100 and change after that but I don't expect it would go past the $530 upfront fee.

The stakes you play at wouldn't be relevant but that the majority of you winnings occurred in two months and that this is you first year would probably allow you to get away as being a hobbyist. There is really no way to say for sure but you would be in a much better position than the majority of us.

The freeroll is an interesting question. That it was free entry isn't a factor but if you are not a tournament player and then win the one tournament you play should that be included or not? I think the onus would be on you to prove that tournaments are sufficiently different than cash games to exclude it otherwise it would be included.
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Old 06-20-2008, 01:00 PM   #494
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Re: Canadian Online Poker Tax Thread

Resurrecting the thread. I wrote last year:

Quote:
... it also depends on how many hours you've spent over that year playing poker. If you enter one tournament only, and happen to win 6 figures, you've got a much better case for "windfall" than "expectation of profit".
I cashed in a WSOP event this year, and I hope I'm right. Considering the IRS has already laid claim to 30% of it, and the marginal tax rate is 39% in AB, my first thought was just pay the other 9% to Canada and be done with it. However, considering I have *no* intention of quitting my job to join the tournament circuit (I'm actually taking holiday days from work to play in the Main Event this year) it's a nice hobby. My other play for the year has been about 15 Friday nights beating on the regulars, drunks and fish in a live $1/$2 NL game, 2 live tournament blowups (bluffing calling stations = -EV), and I've logged about 80 hours of online play in total (under water for a piddly amount so far this year).

What would you do: Pay CRA or not? (Remember that my win is a lot more traceable than a Sunday Million win, for example, because it's not through a pseudonym.)
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Old 06-20-2008, 01:12 PM   #495
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Re: Canadian Online Poker Tax Thread

Based on your play you shouldn't be taxed in Canada. What I'd try would be to get back the funds held by the IRS. There use to be a lawyer that specialized in that. Don't remember his name but he use to advertise in the paper edition of Card Player and occasionally at 3am on TV. I'm pretty sure he worked on a percentage but I'd do some research since it might be something as simple as filling out some forms that you could do yourself. I remember a conversation about this at a live game but I didn't pay much attention since I don't play tournaments.
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Old 06-20-2008, 01:44 PM   #496
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Re: Canadian Online Poker Tax Thread

Thanks, Henry.

re: IRS taxes ... I remember stevepa and I had a discussion about this at one point (over in Poker Legislation ... I think ...) and he corrected me on all of the salient details because I was incorrect on virtually everything regarding the withholding laws for Canadians.

The IRS forms don't scare me that much; I've filed enough W8-BENs through work that I can probably manage to do this on my own. The lawyer generally spends most of his time teaching you about how to get an ITIN (which I've already gone through at the WSOP), and then fills out the paperwork with you for a "fee" (showing you where to put the offsetting tax on your CRA form, et cetera). I've got the tournament receipts that I need to mark off my expenses.

One of the interesting things is that each tournament I enter now in the States until the end of the year has 30% Rakeback. Now if only I had the time off of work to play more than the Main Event ...
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Old 06-20-2008, 04:17 PM   #497
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Re: Canadian Online Poker Tax Thread

SlightlyMad

Getting a refund on US withholdings has been discussed a lot earlier in this thread or in the legislative forum.

It comes down to pay someone 30%+ of your refund or do it yourself using US IRA forms.

I'd do the search for you but then I'd expect a fee.

You certainly sound like a part-time hobby player and I see no reason you owe Cdn taxes on your winnings. Congrats btw.
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Old 06-23-2008, 07:44 PM   #498
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Re: Canadian Online Poker Tax Thread

just saw a quick cardplayer.com video clip of Glen Chorny (winner of EPT Monte Carlo) and he just quickly said something along the lines of having a good tax situation in Canada. I wonder what he's been told.

Does anyone know of any poker pro's that have been audited by the CRA yet?
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Old 06-25-2008, 07:46 AM   #499
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Re: Canadian Online Poker Tax Thread

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Does anyone know of any poker pro's that have been audited by the CRA yet?
I know of a few.
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Old 06-25-2008, 01:26 PM   #500
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Re: Canadian Online Poker Tax Thread

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I know of a few.
Can you elaborate a bit TorontoCFE? Were they forced to pay taxes or had they already been paying? if they hadnt been paying their taxes did they get the expected penelties etc?
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