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Old 06-22-2010, 08:00 PM   #1301
roy_miami
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Re: Canadian Online Poker Tax Thread

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Originally Posted by wildatheart3 View Post
So are there any reported cases to date of the CRA pursuing any profesional poker players who have not declared their income?

I mean if this is the case and its been how many years............ since they could have been going after us all, i understand the unpredictability of it all, but it makes me a little less worried over not declaring income. Obv it holds some risk but any poker player understands the concept of risk/reward. My (admitadadly little) understanding leads me to beleive that it is waaaaaaaaaaaaay worth it not to declare.
Yeah and even if they did come after you I think they would just want the taxes owed and maybe interest. I highly doubt they fine you or throw you in prison for tax evasion with the law being so vague.
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Old 06-29-2010, 01:16 AM   #1302
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Re: Canadian Online Poker Tax Thread

Hey guys, do we get taxed on tournament scores in Canada? I am not a pro at the moment and I plan to play a 5k event here in Canada where 170k is 1st place prize. If I were to take this down Whay happens? Someone told me they withhold 30% of the winning for tax purposes?

Also if I sell action to people in the US or UK does anyone know if I can simply send them the money if I win or does some paperwork have to be done?
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Old 06-29-2010, 02:40 AM   #1303
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Re: Canadian Online Poker Tax Thread

No the Canadian government doesn't withhold a percentage of your winnings.
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Old 06-29-2010, 08:25 AM   #1304
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Re: Canadian Online Poker Tax Thread

If you win a single big tournament and you are not playing tournaments frequently then as along as you can prove that was the source of your cash then it is not taxable.

Canadian government never has withholding on gambling wins.

If you start selling action then you start adding ticks to the professional rather than hobby player side of the ledger. Likely not sufficient in and of itself to make you a professional but it does move you in that direction.

You can send money to anyone you want. That is what we have bank wires for. If the amount is large you might have to give an explanation of who is receiving the money and why you are sending it just to satisfy FINTRAC that you are not laundering money or funding a coup but that is it. In theory you could even just get a international draft or even a personal cheque but then your investors are likely going to have their funds held for six weeks to three months by their bank.
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Old 08-02-2010, 04:42 AM   #1305
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Re: Canadian Online Poker Tax Thread

i am hoping to get some straight answers here...i have seen very few situational spots so lets consider this hypothetical situation and many of us can use aspects from it (torontoCFE, Henry17, TaxGuru) :

-i know many of these questions and situations have already come up in this thread...but they are spaced over 80+pages and 5 years so perhaps it is best for all of us to have the answers again.


-this is all hypothetical and 'i' is not me or anyone i know, 'i' may or may not have opened a new 2+2 account just to post this
-you can also give me hypothetical answers to avoid trouble...but please make them hypothetically correct (if you need to pm me please do)

Lets Assume:

1. I am Canadian
2. I currently file a tax form every year which includes about 5k income from my parents business and meager capital gains/losses from my stock portfolio
3. I have decided not to pay any taxes on my winnings and never have in 3 years of pro play, not even a dollar
4. I don't make any mention of poker money whatsoever on my tax form...no 'other income' or anything at all
5. I make about 100k a year
6. Poker is my only source of income (80% online 20% live) all cash games except one 70k live score
7. I pay the majority of my expenses with cash from the live play
8. I have about 40k in a cAD bank, 20k in a CAD investment account and 5k in a hong kong HSBC account
9. I have been cashing 6k - 8.5k on an irregular schedule for over a year probably averaging to once a month...but not regular...all cashouts in single checks/wires. Is there a better approach? Hoping to stay off FINTRAC radar. This has led to a build up of online money which i have been reluctant to cashout in case of raising a red flag by cashing out bigger or more frequently.
10. I have no fixed assets

Some Misc Stuff:

1. This quote from Henry17
"Actively trying to hide winnings though is a completely
different topic. Most people either don't have the skills
or don't make enough from poker to make actively hiding +EV.
They will **** it up and that will make things worse than
just doing nothing and hoping you never get that letter from CRA."

What is the skill set, what do i need to do? what should i not do?

2. Quote from Henry17
'If you have been winning consistently for a year and a half
then yes you are likely legally taxable. That being said if
you don't report it the chance of ever having any issues is
very very small. The consequences should you get caught are
also likely not that significant if you do nothing to actively
hide winnings and are able to pay. I think that makes it +EV
to not report but that is a personal decision based on your
risk tolerance, morality toward taxes, and how visible you are.'

I believe i mostly follow this advice...although i need to do
something about my cashout habits as they likely look suspicious, but what?

I do not hide my winnings, i just ignore them

Visibility?

How do I get assets and start a business say a franchise and
still maintain low visibility?

Basically I believe I have a lifestyle that is low visibility, but I don't want to. How can I start using my money to make more money and buy assets while maintaining low visibility?

My questions:

1. How do I get this money to my bank account with minimal attention

2. I have a couple hundred k online already, I would like to get much of that out as well

3. How can I use the money for purchasing assets, ie. house, nice car? Also adding to my stock portfolio

4. If I were to start paying taxes from today forth, what happens with the money I have made in previous years especially the amount i have not cashed out? Is that taxable? Won't starting paying taxes now make me more likely to get an audit?

4. How dumb is what i am doing?

5. What is my best plan of action?

p.s. sorry for the length

Last edited by poker121; 08-02-2010 at 05:11 AM.
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Old 08-02-2010, 10:04 PM   #1306
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Re: Canadian Online Poker Tax Thread

Perhaps it would be wise to seek some proper professional advice rather than rely on answers from a poker forum. You owe it to your future self, who will almost certainly look back with thanks.
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Old 08-03-2010, 05:27 AM   #1307
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Re: Canadian Online Poker Tax Thread

true enough...do i talk to an accountant or a tax lawyer? i heard accountants have a responsibility to report so i have been avoiding that. i'm in toronto, any suggestions of who to contact for 'professional advice'
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Old 08-03-2010, 08:22 AM   #1308
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Re: Canadian Online Poker Tax Thread

Accountants have to report if you directly involve them in a transaction - like wiring them money and then having them buy assets for you.
They may also have to testify against you if brought into court - they don't have client-attorney privs - and CRA forces them to and they know what you're up to but this is pretty rare.
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Old 08-03-2010, 08:27 AM   #1309
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Re: Canadian Online Poker Tax Thread

Lawyers have the client-attorney confidentiality but given the type of questions he is asking they really can't help him either. It has been a long time since I looked at the code of ethics but I'm pretty sure lawyers are prohibited from instructing or assisting individuals who are trying to commit a crime.
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Old 08-03-2010, 10:40 AM   #1310
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Re: Canadian Online Poker Tax Thread

What would be most helpful to you is a legal opinion that your poker winnings are not income from a source. If you could get that, everything else would essentially fall into place.

Distinctly second best would be a legal opinion that points out how nebulous this area of tax law is, and suggests that it is at least debatable whether your poker winnings are income from a source or not. This is not as good as the first best, but would nevertheless provide some comfort.
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Old 08-03-2010, 08:25 PM   #1311
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Re: Canadian Online Poker Tax Thread

TaxGuru, how on earth is he going to get that via the tax lawyer, aside from attempting to file the taxes and having a CRA rep/auditor say "Take that off your taxes" (as one the previous posters had happen to him)?

I honestly wish that someone with nothing to lose (i.e. they could easily afford to pay the penalty because they are independently wealthy) could get dragged through the CRA appeals process so we can have at least some form of precedent on what makes poker taxable or not taxable.

Whatever happened to that guy who claimed the Department of Finance was working on rules making poker a game of skill and taxable in Canada?

And, something that has been bugging me for a while; should this thread have a FAQ/summary at the top (similar to the US Taxes thread in Poker Legislation) so that we're not answering the panicky Canadians? I'm pretty sure that the three bigwigs with the in-depth technical knowledge (TorontoCFE, Henry, TaxGuru) could write it in a straightforward way that answers 90% of the questions. (And link it into TaxWiki.ca along with that G&M editorial ... nice site, TaxGuru!)
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Old 08-03-2010, 08:36 PM   #1312
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Re: Canadian Online Poker Tax Thread

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Originally Posted by SlightlyMad View Post
TaxGuru, how on earth is he going to get that via the tax lawyer, aside from attempting to file the taxes and having a CRA rep/auditor say "Take that off your taxes" (as one the previous posters had happen to him)?
By walking into a law firm and asking them to write an opinion.

Quote:
Whatever happened to that guy who claimed the Department of Finance was working on rules making poker a game of skill and taxable in Canada?
If poker is a game of skill is not directly relevant to poker income being taxable so I have no idea why any of that would matter.
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Old 08-03-2010, 10:11 PM   #1313
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Re: Canadian Online Poker Tax Thread

I have posted a new taxwiki.ca eBook with an extended analysis. To check it out, visit http://www.taxwiki.ca/, and select "taxwiki.ca eBooks" from the left menu.
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Old 08-03-2010, 11:53 PM   #1314
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Heart Re: Canadian Online Poker Tax Thread

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Originally Posted by TaxGuru View Post
I have posted a new taxwiki.ca eBook with an extended analysis. To check it out, visit http://www.taxwiki.ca/, and select "taxwiki.ca eBooks" from the left menu.
Thanks for posting this.
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Old 08-04-2010, 12:49 AM   #1315
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Re: Canadian Online Poker Tax Thread

Henry, if the lawyer says that the income isn't from a source, but the CRA disagrees with your lawyer's assessment and you subsequently lose the appeal, aren't you in the same situation as you were before? How does this assist in transferring liability from penalties away from yourself? (Forgive me from being naive about the law ... IANAL.)

It's probably all written down in that eBook ... some light nighttime reading there. ;-) Thanks for the link, TaxGuru!

Quote:
If poker is a game of skill is not directly relevant to poker income being taxable so I have no idea why any of that would matter.
It was a number of months ago ... someone was prattling on about the Finance department proposing that it wants the casino to monitor and report every poker cash transaction. Imagine how much fun cashing in and out of a poker game could get! :-(

It sounded like poker was going to be handled differently from all other games of luck within a casino, and treated differently for taxation purposes. If they decreed that all poker variants (Hold'Em, Omaha, Stud, et cetera) were games of skill and not luck, and simultaneously defined new regulations for games of skill; they could separate us from the hobby/business determination and decree that all recreational games of skill are a source of income and, therefore, taxable. From a policy point of view, that would be the easiest way to ensnare poker players within the CRA's grasp. Not necessarily fair, but it would make the rules much clearer than they are now!
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Old 08-04-2010, 06:33 AM   #1316
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Re: Canadian Online Poker Tax Thread

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Henry, if the lawyer says that the income isn't from a source, but the CRA disagrees with your lawyer's assessment and you subsequently lose the appeal, aren't you in the same situation as you were before? How does this assist in transferring liability from penalties away from yourself? (Forgive me from being naive about the law ... IANAL.)
The difference is that you now have a good faith argument for why you didn't pay taxes in the past. This will not allow you to escape taxes but it will likely eliminate all the penalties and maybe even the interest.

The problem is that you'll never find a lawyer to write you one of these. I shouldn't say never since the last criminal appeal I worked on the crazy client had an opinion letter that claimed he he had grounds for appeal. I found that odd until when going though the material I found a file with 22 other opinion letters all saying no. So basically if you go to enough people eventually someone will tell you what you want to hear.

Quote:
It was a number of months ago ... someone was prattling on about the Finance department proposing that it wants the casino to monitor and report every poker cash transaction. Imagine how much fun cashing in and out of a poker game could get! :-(
There was legislation that passed 2-3 years ago that involved various industries monitoring cash transactions and that included casinos. It has nothing to do with income tax. They are trying to catch people involved with money laundering. The monitoring of real estate transactions I believe was new but I think the requirements on casinos already existed. I know the casino pulled me aside years ago and wanted to know after a series of really large cash transactions.

Quote:
It sounded like poker was going to be handled differently from all other games of luck within a casino, and treated differently for taxation purposes. If they decreed that all poker variants (Hold'Em, Omaha, Stud, et cetera) were games of skill and not luck, and simultaneously defined new regulations for games of skill; they could separate us from the hobby/business determination and decree that all recreational games of skill are a source of income and, therefore, taxable. From a policy point of view, that would be the easiest way to ensnare poker players within the CRA's grasp. Not necessarily fair, but it would make the rules much clearer than they are now!
No. This would open up a whole can of worms regarding how to deal with losses and given the vast majority of players are losers that is a big issue. There is nothing wrong with the current method other than that CRA does not actually put much effort into enforcing it. This is expected since the public service is just a make work project for people who normally couldn't make manager at Burger King. The day they choose to enforce the current law they will get most of the players. There is nothing wrong with the current system other than it just isn't a priority to enforce it.
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Old 08-04-2010, 02:24 PM   #1317
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Re: Canadian Online Poker Tax Thread

Henry, if someone did write an opinion like that (think Lionel Hutz operating in Canada) and it is found to be complete crap by the CRA, does the lawyer end up getting sanctioned, or can it still legally blow back on the client for choosing a lawyer that is incompetent (assuming he only went to one lawyer and that one was willing to write the awful opinion).

If games of skill were taxable, it would be a whole can of worms *IF* the Finance Department actually allowed you to offset gambling losses against other income. If it was handled similarly to the States (i.e. gambling losses can only be offset against gambling wins ... it's a whole different class of income), the winners would be the only ones to pay taxes.

This is all purely hypothetical and not germane to the law as it is written today, of course. I should let others get back to the typical "I haven't filed taxes on my millions in cash game wins, am I going to get into trouble" questions that this thread accumulates.

One Final Plug: READ TaxGuru's eBook on taxwiki.ca! It's fantastic!
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Old 08-04-2010, 03:01 PM   #1318
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Re: Canadian Online Poker Tax Thread

i read the taxwiki last night, really good stuff. thanks for posting that.

Quote:
Originally Posted by TaxGuru View Post
What would be most helpful to you is a legal opinion that your poker winnings are not income from a source. If you could get that, everything else would essentially fall into place.

Distinctly second best would be a legal opinion that points out how nebulous this area of tax law is, and suggests that it is at least debatable whether your poker winnings are income from a source or not. This is not as good as the first best, but would nevertheless provide some comfort.
So it sounds like I have a 1 in 23 shot of getting this legal opinion, otherwise i am as stuck as ever?
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Old 08-04-2010, 06:26 PM   #1319
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Re: Canadian Online Poker Tax Thread

Thank you taxguru! You've done a wonderful service by publishing this. Your contributions to this thread are invaluable.

My thanks again to taxguru and Henry17 for all the great work they do here.
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Old 08-04-2010, 07:50 PM   #1320
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Re: Canadian Online Poker Tax Thread

They should just make it law that any gambling winnings over $10k net profit per year is taxable and maybe make certain lotteries exempt (6/49 ect) or not. That would keep most of the recreational players from having to worry about it and it would make things a lot simpler for the guys pulling in big bucks year after year.
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Old 08-05-2010, 03:43 AM   #1321
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Re: Canadian Online Poker Tax Thread

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Originally Posted by roy_miami View Post
They should just make it law that any gambling winnings over $10k net profit per year is taxable and maybe make certain lotteries exempt (6/49 ect) or not. That would keep most of the recreational players from having to worry about it and it would make things a lot simpler for the guys pulling in big bucks year after year.
bingo.
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Old 08-08-2010, 03:17 PM   #1322
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by roy_miami View Post
They should just make it law that any gambling winnings over $10k net profit per year is taxable and maybe make certain lotteries exempt (6/49 ect) or not. That would keep most of the recreational players from having to worry about it and it would make things a lot simpler for the guys pulling in big bucks year after year.
most horrible idea ever. Are you serious? So a guy sits down at a 25/50 table 1 day in a year, plays 20 hands hits some serious ****, makes 15k and pays taxes on pure luck? Or vice versa, sits down at a table for 1 hour a year, one year he loses 100k, the next he wins with luck 30k and has to pay taxes. Does not equate.
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Old 08-08-2010, 03:48 PM   #1323
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Re: Canadian Online Poker Tax Thread

YouSureSir,

It's the way Canadians are treated in the US on gambling (with a $5000 min profit in a poker tournament before withholding kicks in). Why should it be different here?

The average recreational poker player does not sit down in a $25/50 game, and they are the ones we are trying to protect here. You're talking about a 0.01% case versus the grinders/tourney pros/still haven't left their parents' basement types who spend thousands of hours playing online over the course of a year earning their $15/hour (or more).
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Old 08-09-2010, 07:42 PM   #1324
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Re: Canadian Online Poker Tax Thread

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YouSureSir,

It's the way Canadians are treated in the US on gambling (with a $5000 min profit in a poker tournament before withholding kicks in). Why should it be different here?

The average recreational poker player does not sit down in a $25/50 game, and they are the ones we are trying to protect here. You're talking about a 0.01% case versus the grinders/tourney pros/still haven't left their parents' basement types who spend thousands of hours playing online over the course of a year earning their $15/hour (or more).
You have it backward. The minority is the winning players and the majority your average joh who dumps money from time to time. There is way more people losing than people winning that's for sure.
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Old 08-10-2010, 01:49 PM   #1325
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Re: Canadian Online Poker Tax Thread

Wow! http://www.theglobeandmail.com/news/...rticle1668179/
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