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Old 06-26-2008, 10:17 AM   #501
TorontoCFE
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by QuarterTon View Post
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?
Of the 6 I have most knowledge of:

1. 5 came to the attention of the CRA because of activities not related to poker. What attracted attention was things like too many all-cash deals, not reporting investment income and a normal business audit.

2.1 was reported by a neighbour. This led to many large deposits being found and a check of their income tax return showed no income reported for 3 years (after the guy had made a decent living for 10 years and dutifully filed correctly.

3. In 3 cases, the income from poker was not significant for the CRA to worry about and they focused on the other activiities. In 2 the person accepted a reassessment to include poker in their income and paid the tax without further fight in order to get the matter resolved. They paid only the tax with no penalty or even interest. In 1 the issue is still waiting to be resolved.

My understanding (3 party) to the cases was the CRA is implying (as the are wont to do) that if:
1. The amount involved is not significant they won't waste their time and will overlook it even if they are aware of the earnings.
2. If the amount is large and they think you haven't been trying to hide your activities and don't test them in court , they will want their tax and be happy with that.
3. If you do take it to court, they are looking for the tax plus another amount equal to the tax as a penalty, plus interest.
4. There is no desire to go for criminal or anything but monetary damages if only poker earnings are involved.

I'm aware of these cases through friends / associates so some of the details (which may or may not be important) I may not know of.
I am not directly representing any one who has been audited.
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Old 06-26-2008, 10:39 AM   #502
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Re: Canadian Online Poker Tax Thread

Excellent info, thx CFE.
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Old 06-26-2008, 05:31 PM   #503
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Re: Canadian Online Poker Tax Thread

Hey guys, i have a question.
I quit my job like 3month ago and took the last 5month off from school.
I am having a stellar year, im up more than 6figures and poker is my only income for the year now. Do i have to pay taxes for my winnings or can i consider myself a student and not pay taxes.

Do students have to pay taxes??
Say if i register for 2 course at a community college and make money from poker do i have to pay taxes??
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Old 06-26-2008, 05:36 PM   #504
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Re: Canadian Online Poker Tax Thread

Yes students have to pay taxes.
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Old 07-29-2008, 04:15 PM   #505
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Re: Canadian Online Poker Tax Thread

I have a couple of recommendations for a tax lawyer and an accountant with expertise in gambling issues. Since I was in the position of looking for advice a while ago, I thought some other people might appreciate the recommendations. I don't know either of these guys personally, nor would I benefit from them getting any extra business.

As a tax law expert, Benjamin Alarie from the University of Toronto wrote a legal opinion for me on the taxation of internet poker as it applies to my situation. He analyzed past tax court cases against gamblers as well as the existing legislation and compared it to the issues for online poker winnings. He created a very strong case against the taxability of online poker winnings in most situations. Basically, he argues that the winnings are taxable only in the case of a full time gambler with a long track record of consistent success. But he acklowledges the grey area and the difficulty in ascertaining the exact point at which someone crosses the line between profitable hobbyist gambler(generally untaxable) and professional gambler operating as a business and thus able to deduct potential gambling losses.

You can find his contact information on google if you are interested. He wrote a paper called "Bet on It: the Taxation of Internet Gambling" and has expertise in taxation issues and gambling taxation in specific. Since he has already done a lof of the background work, there would probably be less work and expense for future opinions. He seems like a nice guy and I think he would be fine with preliminary emails to ascertain if his services would be useful to a particular situation.

For accounting advice related to poker winnings I would recommend TorontoCFE who obviously has contributed a lot to this thread. He was quite knowledgeable and professional and has experience with other poker players as clients. His rates were also reasonable and I think he would be a good choice for anyone seeking accounting advice, particularly as related to poker.
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Old 07-29-2008, 04:27 PM   #506
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Re: Canadian Online Poker Tax Thread

I'm very surprised that Benjamin Alarie would come out with a don't have to pay tax opinion. He teaches tax at UofT law school so his credentials are good. He clerked at the SCC which is very impressive but he got assigned to Justice Arbour which makes me feel sorry for him. Was this something he did specifically for you or is it a paper he is having published?
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Old 07-30-2008, 12:10 AM   #507
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Re: Canadian Online Poker Tax Thread

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Originally Posted by Henry17 View Post
I'm very surprised that Benjamin Alarie would come out with a don't have to pay tax opinion. He teaches tax at UofT law school so his credentials are good. He clerked at the SCC which is very impressive but he got assigned to Justice Arbour which makes me feel sorry for him. Was this something he did specifically for you or is it a paper he is having published?
Henry, it's a legal opinion that he wrote specifically for me. But I think he mentioned that he had already done a bunch of research on this subject independently, so perhaps he has plans of publishing something.

To clarify, his opinion is not that poker winnings aren't taxable but that you need to have a history of fairly consistant success before the point occurs that the courts would consider your income taxable (and also your losses to be tax deductible). I'm reluctant to summarize for him though, because it was a long and complicated document. There are quite a few cases that have gone to tax court against gamblers, but I don't think the CRA has won one since the 1950s, and those were against gambling on snooker and golf (demonstratable physical skills) and also for inside information on horse racing. However, TorontoCFE has stated that there have been several cases which were settled out of court with poker players, so presumably they didn't like their chances of winning against the CRA.

This legal opinion doesn't meet the request of NL_Fool to find a lawyer willing to unequivically state that online poker winnings aren't taxable. Since he has been playing full time for a long time period with presumably consistant success. But maybe it's debatable whether he was taxable initially. Either way, from the legal briefs that I've read on the subject, some of the judges don't seem to make logical inferences in the gambling tax cases. Taxation is avoided in one case because the judge claims that a poker player was lucky over several years for example. Similar reasoning was used for the Leblanc case. I think that Alarie's opinion of the tax situation is more similar to TorontoCFE's than to yours. The CRA needs to set the bar fairly high to avoid people being able to claim that they are in the poker business after a hot streak, and thus being able to deduct future losses.
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Old 07-30-2008, 06:53 AM   #508
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Re: Canadian Online Poker Tax Thread

Ok that makes a lot more sense. That is basically the same thing both TorontoCFE and I have been saying. The only difference is the length of history required.

My view has always been half a million hands. I picked that number because before I killed half my brain cells drinking that was about two times what I worked out as the number of hands required to bring luck to negligible. The length of what constitutes a long enough history to be consider a pro though has never been settled as far as I know. When a case goes to trial there will be two ways to go at it. The best way would be to bring in experts who could do that math. The second would be to use the player's actions to infer it. While I believe the first method is better I suspect the second will actually be used.
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Old 09-27-2008, 04:54 AM   #509
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Re: Canadian Online Poker Tax Thread

say i play for a living and i dont want to pay taxes, is there a specifc method of cashing out that i should prefer in order to stay as far below the radar as possible?? i play at stars and i currently just get the cash put back on to my TD visa and then slice off the extra credit and shift it into a TD bank account. tanks.
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Old 09-27-2008, 10:42 AM   #510
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Re: Canadian Online Poker Tax Thread

Is online poker Legal in Canada

The short answer to this question is... Yes. There are, at this time, no specific laws against playing poker on the internet. This doesn't necessary make it legal, it simply makes it not illegal. The standard rules apply, as they do to every form of gambling.



Thankfully, poker winnings both online and in casino poker rooms are non taxable at this time. as a casual poker player, there is no need to claim your poker winnings.

Typically, the government sees all gambling in the same light. As a losing proposition for the majority of people. There are regulations, however, for "professional" gamblers. If you make a living playing cards, you are considered by the Canadian government to having a profession, and your winnings are taxable. If you "apply skill and investment to achieve a profit", you should be paying taxes. As quoted from the Canadian Customs and Revenue Agency: "Winnings derived from a dedicated approach to gambling is taxable income".

If you do play poker for a living, there is good news. The majority of the investments made to play poker can now be tax write offs. Travel, meals, hotel stays, etc. that are involved in your poker playing can now be written off.
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Old 10-02-2008, 02:52 PM   #511
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Re: Canadian Online Poker Tax Thread

I work for the CRA and I had asked this question to one of the higher ups in my first week there. His general explanation was that if you're considered a poker player by profession you must include the income. However, if that's the case you also get to claim employment expenses and losses. Proving you're a poker pro is a serious gray area.

As far as being a student it makes no difference. You could be a child in kindergarten if you have taxable income you must file a return and pay tax on it.
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Old 10-07-2008, 08:21 AM   #512
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by FreshMeat View Post
say i play for a living and i dont want to pay taxes, is there a specifc method of cashing out that i should prefer in order to stay as far below the radar as possible?? i play at stars and i currently just get the cash put back on to my TD visa and then slice off the extra credit and shift it into a TD bank account. tanks.
Im going to expand on this question a bit - should I go for regular 5-15k cashouts, or wait to cash out like 75k @ once to appear like a 'windfall?' Does a 75k bank wire 'flag' me in any way?

Should i worry about 5-10k monthly credit card spending, while not reporting any kind of income?

If my dad has a small business, should I have him hire me as a 'consultant' or something and just pay the tax on that, or will the salary < my credit card bills attract attention?
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Old 10-07-2008, 08:38 AM   #513
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Re: Canadian Online Poker Tax Thread

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Im going to expand on this question a bit - should I go for regular 5-15k cashouts, or wait to cash out like 75k @ once to appear like a 'windfall?' Does a 75k bank wire 'flag' me in any way?
Makes no difference.

Quote:
Should i worry about 5-10k monthly credit card spending, while not reporting any kind of income?
Yes

Quote:
If my dad has a small business, should I have him hire me as a 'consultant' or something and just pay the tax on that, or will the salary < my credit card bills attract attention?
It depends on how and why but if you intend to pay income tax on income anyway I don't see the benefit of getting other people involved over just reporting the poker income. Normally fake employment is used to legitimate illegal income. Poker is not illegal so this is not really useful.
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Old 10-08-2008, 04:53 PM   #514
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Re: Canadian Online Poker Tax Thread

But doesn't having a side "job" which you pay taxes on help protect yourself in the future? If you are careful with what you buy and how you buy it (ex: expensive cars or houses) along with having a low 5 figure income every year, your poker winnings should slide more smoothly no? Or is it not even worth the energy to try and get a "job" with a declared revenue when you will be transfering way more money from poker sites?

I've heard that the key is how you spend your money. Basically they have programs that just track down what you buy and they compare it to your reported revenue. Basically if you buy a 100k car under your name and you have no declared revenue, they will get suspicious. Is this accurate?

Also, if money is being transfered into my bank account from poker sites or neteller and then transfered to a family member, is that money considered my revenue that I give away or can it be considered something else?
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Old 10-08-2008, 05:25 PM   #515
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Re: Canadian Online Poker Tax Thread

By low five figure I assume you mean $30-50k. That really isn't going to explain how your net worth is increasing by $150k a year. It isn't going to hurt you but if CRA decides to look at you then it won't help you either since there is no way the fake job is going to be able to explain your net worth.

I have no idea how CRA tracks stuff but if I had to guess I'd say they get a lot of information from FINTRAC. I'm pretty sure a lot of it is also from information you provide yourself. This money has to go somewhere and normally it is going to be generating income which you will have to report. If someone has a $300k portfolio but not way to explain it that is something CRA likely to track.

Your income is your income. That you choose to give it away doesn't make it not your income. It is no different than if you make $200k working on Bay st and then gave away $75k to family. You still pay income tax on the $200k. Why would poker be any different?

Basically when it comes down to it you have four options. The first is just to just declare the income and pay you taxes. The second is to not declare the income and hope for the best. Third is to declare the income and get professional help to set up an elaborate plan to limit how much income tax you actually have to pay. Fourth option is to full out launder the money which obviously has risks. Those though are the only four options. Doing anything in between is just wasting effort for little or no gain.
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Old 10-08-2008, 07:42 PM   #516
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Re: Canadian Online Poker Tax Thread

Interesting discussion. Would I have to declare receiving things from the Stars fpp store like a $1k Future Shop Gift Cerficate and list it as income?

If I go ahead and start declaring my poker as income to the CRA, how aggro can I write off? Besides the internet, computer setup/desk/chair/computer room furniture, can I write off trips to vegas + someone I brought along and paid for her expenses? What else could I write off?
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Old 10-08-2008, 08:09 PM   #517
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Re: Canadian Online Poker Tax Thread

pretty sure I remember someone saying you can also write off part of your rent for 'office space'.
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Old 10-08-2008, 08:26 PM   #518
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Re: Canadian Online Poker Tax Thread

Stuff from the VIP store would be considered income. It is to prevent people from circumventing the system by having their employer pay for personal stuff. If an employer gives you a car for personal use, gym memberships, use of a residence, etc it is all income.

If you claim a home office you could probably deduct a small portion of your rent. The impact of that is nothing substantial though and if you try to push it and claim you need some unreasonable portion of your home for online poker you are just going to get CRA to audit you.

Also if you own the home I think claiming the home office would then make that portion of the home subject to capital gains at disposition. I'm not 100% sure of that as I'm exhausted and tax law was 10 years ago. If someone is going to claim a home they own I suggest they read up on it first as it isn't worth it if I'm right.
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Old 10-09-2008, 03:15 AM   #519
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Re: Canadian Online Poker Tax Thread

Has anyone in this thread filed taxes as a poker pro?

Is anyone else in this thread in the same situation as me : they last filed while a student (highschool or university) while making < 20k a year, and now have 6 fig bank accounts / 50k cc bills with no income tax filed in the last couple of years?

Henry, what would you (briefly) advise for that situation?

The accountant of my fathers business spoke with a guy @ CRA last year after i explained my situation ( i had only made 75k in 07 im guessing.) The impression he gave me, was that depositing on a poker site is negative expectancy for most people, and as such is treated like the lottery (where winnings arent taxed.) This year, results have improved quite a bit, and i dont want to be put into a situation in the future where I own a condo/house but get retroactively billed + interest/fee for taxes I 'owe' right now
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Old 10-09-2008, 07:01 AM   #520
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by Scotty_12 View Post
Has anyone in this thread filed taxes as a poker pro?
Yes. I don't declare the income but there are at least two individuals in this topic who earlier stated that they do declare the income.

Quote:
Is anyone else in this thread in the same situation as me : they last filed while a student (highschool or university) while making < 20k a year, and now have 6 fig bank accounts / 50k cc bills with no income tax filed in the last couple of years?

Henry, what would you (briefly) advise for that situation?
No idea. My view is that it is a little late to do anything now and basically the only two options is do nothing and hope for the best or find a tax lawyer and try to work something out.

Quote:
The accountant of my fathers business spoke with a guy @ CRA last year after i explained my situation ( i had only made 75k in 07 im guessing.) The impression he gave me, was that depositing on a poker site is negative expectancy for most people, and as such is treated like the lottery (where winnings arent taxed.)
That is incorrect. Poker for people like us is without a doubt taxable.
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Old 10-09-2008, 09:08 AM   #521
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by mephisto View Post
Interesting discussion. Would I have to declare receiving things from the Stars fpp store like a $1k Future Shop Gift Cerficate and list it as income?

If I go ahead and start declaring my poker as income to the CRA, how aggro can I write off? Besides the internet, computer setup/desk/chair/computer room furniture, can I write off trips to vegas + someone I brought along and paid for her expenses? What else could I write off?

a Percentage of my Property Taxes, Morgatge Interest, Utilities, household expenses, household repairs, Auto expenses, meals and trips to vegas, and Atlantic city where all things I wrote off last year on my taxes as well as what you mentioned.

You can also write off bank charges service fees and other misc items like Computer paper and discs for storing your databases etc.

You won't be able to write off your friends portion of the Airplane tickets but you will be able to write off meals and your room as the Goverment doesn't need to know you went with someone else.
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Old 10-09-2008, 11:28 AM   #522
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Re: Canadian Online Poker Tax Thread

Nice info NL__Fool, what % did you write off. Giving me a ballpark figure will help me out once I start declaring.
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Old 10-09-2008, 03:04 PM   #523
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Re: Canadian Online Poker Tax Thread

Henry17, I really appreciate all the information you share in this thread.

I noticed this thread in HSNL and I'm wondering if you can comment on what Snoop Todd claims in his post?

https://forumserver.twoplustwo.com/19...nnings-317470/

If what he says is true about a top lawyer telling him that no one needs to pay, no matter their status, then clearly I would be out of my mind to pay on my lowish six-fig income for 08?

I really wish the CRA would just straighten all this bs out for once and for all :|
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Old 10-09-2008, 03:11 PM   #524
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Re: Canadian Online Poker Tax Thread

He is wrong. It isn't even a question. There is so much case law on this that any lawyer who would claim professional gambling is not taxable would be disbarred for incompetence.
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Old 10-09-2008, 04:36 PM   #525
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Re: Canadian Online Poker Tax Thread

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Nice info NL__Fool, what % did you write off. Giving me a ballpark figure will help me out once I start declaring.
I work mainly as a graphic designer from home. My write offs for my rent are the % of space my office takes, so around 25%. I deduct my internet fees and my computer upgrades as well and any purchases related to my work.
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