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Old 08-19-2009, 11:53 PM   #751
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Re: Canadian Online Poker Tax Thread

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That wasn't what they meant. That is just moving the debt servicing costs from the home to your investments. They claim to actually make the mortgage itself deductible. The only way to do that is to somehow make the property an investment so I figured have something like having a corporation or trust own the home and rent it to myself but then you run into capital gain issues unless that is the catch. They never did say that manoeuvrer would not subject you to capital gains only that the servicing costs would be tax deductible.
there's always a catch. otherwise every single homeowner woulda started a corporation and rented their property from that corp.

i would imagine that what you've described would be very useful if you own more than one property since you would be slapped with capital gains on your non-primary residence regardless.
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Old 08-22-2009, 03:39 AM   #752
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Re: Canadian Online Poker Tax Thread

I hear a common theme that the ability to charge taxes against the professional poker player is dependent upon this concept of reasonable expectation. Whether or not u play enough hands in enough time within a reasonable sample size.

My question is how do they prove this reasonable expectation of profit. I dont see how they could gain access to your hand history files. What if i just claimed i won the Sunday million. Would they have any way of knowing or verifying the truth to my claims of how much time i devote to poker and the nature of my "skilled" or "lucky" play styles. Someone playing 100 hands of 100-200 nl could yield the same net profit as 100k hands at 1-2 nl.
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Old 08-22-2009, 06:09 AM   #753
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Re: Canadian Online Poker Tax Thread

This has been answered several times.
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Old 08-22-2009, 06:34 AM   #754
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Re: Canadian Online Poker Tax Thread

my bad
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Old 08-22-2009, 07:28 AM   #755
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Re: Canadian Online Poker Tax Thread

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I hear a common theme that the ability to charge taxes against the professional poker player is dependent upon this concept of reasonable expectation. Whether or not u play enough hands in enough time within a reasonable sample size. My question is how do they prove this reasonable expectation of profit. I dont see how they could gain access to your hand history files.
They don't have to prove it; you have to disprove it.
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Old 08-22-2009, 09:07 AM   #756
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Re: Canadian Online Poker Tax Thread

Do we have an idea as to at what point your net worth is big enough to draw the attention of the CRA and make it worthwhile for them to peruse you?
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Old 08-22-2009, 09:24 AM   #757
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Re: Canadian Online Poker Tax Thread

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Do we have an idea as to at what point your net worth is big enough to draw the attention of the CRA and make it worthwhile for them to peruse you?
The CRA does both random and targeted audits. They also respond to tips. Obviously, the precise details of their audit strategy are kept confidential.
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Old 08-22-2009, 09:28 AM   #758
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Re: Canadian Online Poker Tax Thread

that makes sense, but someone must have an idea as to what sorts of things gets the most attention, having net worths on the large side i would assume would be one of them, seeing as the CRA would want to be efficient in who they go after and target people with more money, however im just assuming here.
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Old 08-22-2009, 10:21 AM   #759
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Re: Canadian Online Poker Tax Thread

Some of the people who have been targeted were not high net worth. Tweedle-dee and Tweedle-dum out of Aylmer got on CRA's radar because of public attention they drew to themselves. Their net worth was rather low and most of their winnings exaggerated. Same with Epel he is just a small time local live player who owns a small business. In his case CRA was originally interested in sloppy bookkeeping at the his shoe repair business and then that led to them getting interest in his poker winnings.

There seems to be a high correlation between people who engage in behaviour that would draw the attention of FINTRAC and getting CRA attention. It could just be a coincidence but I believe that there is information sharing. I am much more concerned about FINTRAC than CRA.

Mind you if the government wanted to catch people who have unreported income it is pretty easy to do -- they just don't feel it is worth it for whatever reason. When they decide it is then it will be a big wave.
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Old 08-22-2009, 10:35 AM   #760
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Re: Canadian Online Poker Tax Thread

are there any confirmed cases of someone who didn't file and got found out for whatever reason having to pay interest and or any other kind of financial penalty? from what ive read it seems like what typically happens is u have just have to pay back taxes, is this accurate from the cases we know so far?
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Old 08-27-2009, 01:21 PM   #761
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Re: Canadian Online Poker Tax Thread

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are there any confirmed cases of someone who didn't file and got found out for whatever reason having to pay interest and or any other kind of financial penalty? from what ive read it seems like what typically happens is u have just have to pay back taxes, is this accurate from the cases we know so far?
bothered to read the thread?
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Old 08-28-2009, 11:10 AM   #762
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Re: Canadian Online Poker Tax Thread

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bothered to read the thread?

yeah i did and from what ive read it seems the few cases where people were forced to pay taxes they werent penalized, unless i got that wrong. im asking if anyone knows of any cases where someone WAS penalized. If i missed something just show me where to read.
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Old 08-28-2009, 11:49 AM   #763
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Re: Canadian Online Poker Tax Thread

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Unrelated to poker tax question.

I was presented with the claim that it is possible to set up your mortgage interest as tax deductible.

I can't figure out how. I thought I had it figured out but no. Does anyone know?
My english isnt very good so im not sure... but maybe youre talking about this

http://www.desjardins.com/en/particu...art-argent.jsp
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Old 09-03-2009, 12:46 PM   #764
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Re: Canadian Online Poker Tax Thread

One interesting method imy good friend is using is a click2pay account with the debit card which they provide.

He transfers all his money to the account and withdraws at a local ATM. The problem arises is that each week he is withdrawing >$1000 in 20 dollar bills, and is scared to take them to a bank so he just keeps the cash and spends it. I think it would be very hard for them to prove he is not paying taxes with this method.
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Old 09-03-2009, 01:00 PM   #765
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Re: Canadian Online Poker Tax Thread

Isn't it easy for the gov't to prove someone is not paying taxes? For example, by using the fact that they don't?
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Old 09-03-2009, 01:08 PM   #766
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Re: Canadian Online Poker Tax Thread

If you live completely in cash it is harder but you are going to run into issues with that if you make any kind of serious money. What are you going to do live in a dump and drive a POS car? Never travel?

You also need to store your winnings somewhere and the inability to generate income from savings will make not paying taxes -EV over time not to mention the risk of loss to theft or fire.

Living on cash is fine and would be helpful somewhat if you spend a lot of money on consumables that leave no trace but most poker players are complete life nits so that is really not helpful.
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Old 09-03-2009, 06:46 PM   #767
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Re: Canadian Online Poker Tax Thread

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If you live completely in cash it is harder but you are going to run into issues with that if you make any kind of serious money. What are you going to do live in a dump and drive a POS car? Never travel?

You also need to store your winnings somewhere and the inability to generate income from savings will make not paying taxes -EV over time not to mention the risk of loss to theft or fire.

Living on cash is fine and would be helpful somewhat if you spend a lot of money on consumables that leave no trace but most poker players are complete life nits so that is really not helpful.
Three years ago I had a normal job (skilled trade) and then the economy when to ****. My only option was to move to alberta (i'm from ontario) The first year I collected EI and learned how to play online poker. For the last two years ive made more than my old job. I own two rental homes (i bought before I got laid off). and only pay income tax on them, which after all the deductions is below the $10K mark. I put my Moms house as my primary residence (which I do live a few months out of the year). I have lived in Vegas, Cali, Montreal and Florida. ( i have dual citizenship) I use my click2pay debit card for everything and pay cash for everything. My car is my moms name and if I decide to move back to Ontario in one of my rental houses, I would only deposit the min. in my bank account, I need to live and pay cash for everything else.

For travel get a prepaid visa to book everything and pay cash for the rest. So it is possible to live a normal life living off cash.
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Old 09-03-2009, 07:04 PM   #768
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Re: Canadian Online Poker Tax Thread

The concern with travel isn't booking stuff. I don't have a credit card so I pay cash for hotels and travel. The concern would be records of entering and leaving the country. Probably not a major concern but I believe if you get into actively hiding winnings rather than just playing dumb then you have to be very thorough and cover every possibility however remote.

I live completely on cash so I know it can be done. I just don't believe most people can do it. I also don't believe it is necessarily +EV. Lets assume you are not spending 100% of your winnings. If you compare just taking the hit on the taxes and then being able to invest the money rather than just keeping it in a box under the bed paying taxes actually is the better option as you'd have made back what you paid in taxes in between four and nine years.
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Old 09-10-2009, 02:38 PM   #769
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Re: Canadian Online Poker Tax Thread

I feel like I have a fairly solid argument for not paying taxes on poker winnings I've had from '05-'08 for various reasons such as being a student, big tournament scores, not having a big long string of profitable months with high volume of play/winnings (thanks to school), being involved in other time-consuming and profit venturing activities (real estate project), etcetc..

But I'm now at a point where my only income for '09 will be rental income (owning and renting out a property), investment income (stock market portfolio), and poker winnings. Since April of this year, poker has been my main source of focus. I feel like I can justify '09 as being a "trial period" for seeing if I can be a long-term profitable online gambler as I was re-entering what is a dynamic industry after 12+ months of hiatus. And so I can argue that '09 was not a period of time where I gambled with full expectations of winning and making it my career. This is for the most part, entirely true.

So my questions are thus:

1) Will getting a job (part-time or full-time) help my argument for not paying taxes in 2010 and onward? How about taking more schooling?

2) Just how ugly does it look to the CRA when I am receiving rental income from a property while also having capital gains on (large) investments, while having zero declared source of work/career since graduating school in '08? Does this make me a great candidate to be red flagged and taken to court?

3) Would declaring taxes on poker coaching be a positive influence or a negative one? It would give me at least some sort of "income", but albeit, one that hurts my gambling windfall argument immensely. Is there I way I would word it differently as some sort of financial advising entity as opposed to poker "coaching"?

4) If I was ever faced with the dreaded phone call from the CRA, what would be my best way to handle the situation? I mean it's obvious that lying would be a seemingly stupid risk, but how about deleting all software and such? What types of things would we want to focus on as our argument for not paying taxes in the past?

Thanks for your time guys, I really appreciate it.
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Old 09-10-2009, 03:09 PM   #770
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Re: Canadian Online Poker Tax Thread

1) As an argument no. As a way to ensconced your winnings maybe. It depends on the ratio between your reportable employment income and your winnings. Getting a job making $20k a year while winning $100k will not help in anyway and could make things worse. Getting a job making $60k while winning $50k would help with respect to avoiding detection. I'd say that the employment income has to be at least 60% of your winnings if you are a liberal cash spender or 125% if you are a life nit. Being in school will not help.

2) CRA like the rest of the public service is staffed by idiots. Maybe not as bad as HRDC where I suspect mental ******ation is a requirement for employment but still pretty bad. In the past I have been fairly brazen -- almost challenging CRA to come after me and they never did. If they wanted to they would detect your situation pretty quickly but they just don't seem to care. No one knows though. There have been a lot of really obvious situations in the past and then one year CRA just flicks a switch and goes after everyone who got away with it in the past. I think a lot of e-bay business are going to be in for a shock next spring.

3) You'd basically be giving them the most important component of the four part test on a silver platter.

4) Call a lawyer. Odds are you are screwed at the point and it is just a matter of trying to control the damage. Trying to hide it then is not going to help and will make things worse. Unless you have the expertise to properly hide income you shouldn't -- for 99.9% of poker players the correct play is to play the I didn't realize I should pay I'm so sorry why don't you talk to my lawyer and we'll get this resolved. If you try to hide the winnings you'll most likely screw it up and then it will be obvious that you knew you should have been declaring the income.
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Old 09-10-2009, 05:02 PM   #771
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Re: Canadian Online Poker Tax Thread

I know you've heard it 1000x in this thread, but thanks a ton for help Henry.

The one thing I'm a bit conflicted about is just how "dumb" we should play if ever faced with the phone call from the CRA. If we play completely dumb about having no idea we should have paid, does it not show complete ignorance/negligence? Should we not at least have some sort of back-up material showing why we were under the impression that we shouldn't have to pay? (ie. the nut material would be a respectable lawyer's report saying so but that seems to be pretty hard to come by) Basically just something to show that it was your (and perhaps, others as well) interpretation of the tax laws that led you not to pay, not just simply because you're a degen gambler that never even considered it.. (negligence?)

And lastly (hypothetically speaking of course), are the CRA employees in charge of these things so dumb that it's possible for a student to make a bunch of money while at school, not claim it, move on after school, never get a job, and keep playing poker (without claiming) for 5+ years with no working income each year (yet *somehow*, all sorts of investment income), and never hear a peep about it? For some reason I just have this gut feeling that somewhere lies an all-seeing eye that just won't let this type of thing happen. This is the reason why I felt like getting a part-time job might help me "fly under the radar" without such a glaring oddity existing in my claims each year.

Last edited by Lefort; 09-10-2009 at 05:09 PM.
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Old 09-10-2009, 05:17 PM   #772
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Re: Canadian Online Poker Tax Thread

Just had another thought.. would starting to pay taxes in any given year on poker income for the first time potentially increase your risk of the CRA wanting to backtrack and look into your past years?
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Old 09-10-2009, 05:30 PM   #773
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Re: Canadian Online Poker Tax Thread

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The one thing I'm a bit conflicted about is just how "dumb" we should play if ever faced with the phone call from the CRA. If we play completely dumb about having no idea we should have paid, does it not show complete ignorance/negligence? Should we not at least have some sort of back-up material showing why we were under the impression that we shouldn't have to pay? (ie. the nut material would be a respectable lawyer's report saying so but that seems to be pretty hard to come by) Basically just something to show that it was your (and perhaps, others as well) interpretation of the tax laws that led you not to pay, not just simply because you're a degen gambler that never even considered it.. (negligence?)
No. If you have material for why you shouldn't pay then that means you did research and someone who did research would know that professional gamblers are taxable.

With the exception of people who went to law school or who have participated in discussions with someone who has the common belief is that gambling is not taxable in Canada. If you stopped 100 people on the street and asked is gambling taxable in Canada 90+ would say no. It is what makes our lottery and casinos different than the US. It is the defacto situation.

If when caught you want to argue that you still shouldn't pay taxes that is when you start building the reasons why. This type of thing moves at a glacial speed so you have time.

You start off with well I didn't know better. The reason for that is to avoid culpability as much as possible. Now that I know though this is why I still don't think I should pay taxes.

Quote:
And lastly (hypothetically speaking of course), are the CRA employees in charge of these things so dumb that it's possible for a student to make a bunch of money while at school, not claim it, move on after school, never get a job, and keep playing poker (without claiming) for 5+ years with no working income each year (yet *somehow*, all sorts of investment income), and never hear a peep about it? For some reason I just have this gut feeling that somewhere lies an all-seeing eye that just won't let this type of thing happen. This is the reason why I felt like getting a part-time job might help me "fly under the radar" without such a glaring oddity existing in my claims each year.
It really depends on how you behave. I know people who have been doing this since most 2P2 were in elementary school and CRA has not bothered them. I also know people who get in trouble after a couple of years. In the last few years governments have gotten very serious about catching money laundering and when you combine that with poker becoming part of the popular culture and the game moving online where it is so much easier to track I think getting caught is a legitimate concern. Not sure what the response to that is though. Most people will **** up trying to hide income and volunteering to pay income tax seems a little silly.
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Old 09-10-2009, 06:47 PM   #774
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Re: Canadian Online Poker Tax Thread

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No. If you have material for why you shouldn't pay then that means you did research and someone who did research would know that professional gamblers are taxable. [...] You start off with well I didn't know better. The reason for that is to avoid culpability as much as possible. Now that I know though this is why I still don't think I should pay taxes.
I don't think this is particularly sound advice, though I admit to not having personal experience with this kind of situation. I think the correct advice is to be able to say, "I'm not a professional poker player, and I have a legal opinion explaining why."

One of the bases for avoiding being considered a pro and instead being a hobbyist / poker enthusiast is by making a living another way. In this respect, taking on another employment and/or going into business is actually an excellent idea.
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Old 09-10-2009, 07:37 PM   #775
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Re: Canadian Online Poker Tax Thread

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I don't think this is particularly sound advice, though I admit to not having personal experience with this kind of situation. I think the correct advice is to be able to say, "I'm not a professional poker player, and I have a legal opinion explaining why."
I think getting a legal opinion would be difficult. Assuming we are talking about someone who is clearly a professional.

If someone could get a legal opinion then that is considerably better than my advice. Not only did the individual not know but he even tried to find out and was told all was good by a professional. Problem is getting a professional to do that.

Quote:
One of the bases for avoiding being considered a pro and instead being a hobbyist / poker enthusiast is by making a living another way. In this respect, taking on another employment and/or going into business is actually an excellent idea.
Only if it is significant income. Earlier in the topic people kept thinking that simply getting a job at Best Buy for two nights a week would be enough. Employment is only going to be helpful if you can actually claim you are making a living this other way -- so you need some kind of reasonable income to winnings ratio. I presume that the people who are concerned are making $80k+ at poker so if they are going to get a job it has to be a pretty good one.
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