Based on that article if I'm Duhamel I would say bugger the CRA if they want to tax the ME prize see you in court... no case law in the last half century saying poker winnings are taxable? He would have nothing to lose beside lawyer fee so little case law they can't penalize him for knowlingly or negligently flouting law IMO. And actually I think he'd have a good shot at winning since almost all his earnings came in one shot - very hard to demonstrate Duhamel was carrying on a "business" of wagering based on the article IMO. Even if he said he is pro that apparently doesn't carry much weight.

Also I wonder why we don't have more big tournaments here... the IRS is taking like three times Harrah's cut at the WSOP in Vegas, so you'd think the lack of taxes on the winnings in Canada would be a huge selling feature.

I would imagine Americans would be subject to the same tax whether they won here or in the US.

That is not true. There is plenty of case law saying poker is taxable if you do it as a business the courts just always found that the individual who CRA was after at that time did not do it as a business. That was mostly because the lawyers representing CRA dropped the ball. With online poker it is so much easier that even they can't **** it up.

With Duhamel's situation if those are his charts that someone posted and he was actually a losing player then yes he should be fighting this. If on the other hand he has been successfully supporting himself from poker for two years as he told the G&M then he has next to no chance of fighting it.

You appear to be relying on the small part of the paper which says So yes, you are right, but your question and that answer are nearly totally irrelevant to the question of whether poker income is taxable. You might as we ask when was the last case about the taxability of employment income of armature winders. There are plenty of cases about the taxability of employment income and they will affect armature winders. There are plenty of more recent cases about gamblng income and they will affect poker players.

Read the ebook again, more carefully. Many of the cases cited by the author as relevant to the question of the taxability of poker income are from the past decade.

Interestingly back on March 23 this same Benjamin Alaire wrote in the G&M:

"The Supreme Court of Canada has repeatedly insisted that, as a self-assessing system, Canadian income tax law should be certain, predictable and fair. It seems the current unarticulated approach to the taxation of poker winnings is uncertain, unpredictable and unfair."

That's basically all I've been trying to say, although it seems Mr. Alaire also opined that the American “heads we win, tails you lose” solution is also "unfair". I suspect Mr. Alaire is an avid poker player - I'm not sure the non-poker-playing public would weep in sympathy if we do eventually get hit with American-style taxation.

The American approach is superior to the Canadian approach in that it does away with the personal hobby / professional business distinction with a clear rule. It is inferior because it results in arbitrariness. And because it is arbitrary, tax morale is damaged.

The Canadian approach has the advantage of not being arbitrary. It is based on a clear to enunciate standard. The problem is that the standard is difficult to apply.

It's like the American rule is, "do not drive over 80 km/h" and the Canadian rule is, "do not drive unsafely."

The Canadian way is vastly superior. The US way is unfair. I'm happy to have some uncertainty with people who are close to the cut-off in exchange for a system that actually makes since based on principles.

The US system is a joke. How can they tax windfall wins is beyond me. The Canadian system while murky is at least fair to the donk who luck boxed a big windfall in poker, horse racing, sports betting or the lottery.

How they did it is simple - the Congress wrote the rule they desired into the IRC. The 16th Amendment gives the Congress the right to charge income tax however way they please. Perhaps you think they don't have a moral right - but we're talking about politicians here.

Nothing in the part-written Canadian Constitution precludes amending the ITA to hammer windfalls - the present status of gambling winnings are at the complete mercy of our parliamentarians' goodwill. The more that guys like Jarvis make off with big wins tax free while governments struggle with massive deficits, the more that goodwill will erode.

Timbo

p.s. Once upon a time a tax upon any form of income was considered repugnant, but then we had this expensive war we had to fight and the government had to bring in "temporary" measures to pay for it.

+1

I didn't read every single line of this document but my impression is that: "if it's a business it's taxable but it'll be really unlikely the CRA goes after you and if they do there's a good chance it won't amount to much because the law is so murky when it comes to defining what/who is taxable" ?

It's obvious that an amateur should no pay taxes when winning a tournament because then, the tournament becomes massively, massively -EV.

A pro may pay taxes when winning a tournament because he may deduct the buy in from his revenue... In which case the taxes do no make the tournament -EV for the pro (the taxes only tax the pro's edge).

It's as simple as that.

And that would make the tournament different from other legal forms of gambling how? Lotteries, Pro Line, VLT's and slots are all massively, massively -EV and at least some people still play.

The American system was specifically and deliberately designed is to make ventures like poker tounaments massively, massively -EV. In theory, if you dissuade an amateur from playing, you eliminate the opportunity for a professional to win his money.

I don't agree with the U.S. approach personally but that is the fact of the matter. People on this forum might cry about how unjust the IRS is, but to non-gamblers it's just another sin tax.

Thinking about the US system as a sin tax if not very accurate.

The US system just has a bunch of issues with first principles. They just have tax laws that could never be justified based on any kind of first principle / legitimizing principle. I mean they have a gift tax and inheritance tax which are ridiculous ideas. Gambling is no different. The idea that you can tax all winners but losers can't deduct losses is just a BS ad hoc rule with no underlying justification. The Canadian system cares about first principles / legitimizing principles so while it may end up with specific instances that are difficult to interpret at least the overall system makes perfect sense.

So is the Canadian situation essentially that if poker is a business technically it should be taxed, but ppl don't file b/c it's unlikely to be targeted?

Do you guys not file, or do you file no income if your a pro? Or do you pay taxes on your winnings?

The US system is intentionally designed to levy a blatantly punitive tax on something most lawmakers down there consider a vice. In that sense it is not any different than excise taxes on booze and cigarettes.

Poker players like you and I will take that position, but try telling an evangelical Congressman he's got "no underlying justification" in taxing gambling winnings the way they do.

Really? Then why all the excise taxes and provincial liquor "markups" on alcohol? What "legitimizing principle" does that fall under?

Timbo

I didn't file last year but that's because poker wasn't my main income. This year I am not sure what i'll do yet. I have to file something though, I am not going to hide my income.

Yes but all of those are consumption taxes. The idea of a sin income tax is very strange.

They are sin taxes. I think you misunderstood what I said about sin taxes. If people wanted to tax gambling though the form of a session fee as a sin tax that would be possible to legitimize. Taxing only winners though is an odd way to administer a sin tax since it isn't the activity of gambling so much as simply being good at gambling that is being categorized as a sin. Although Canada does shape most of our public policy to encourage a loser mentality I think going to that level would be excessive.

Those are taxes designed to shape public policy and behaviour, just like film credits, principal residence exemptions, favourable capital gains rates, etc.

Hi everyone,
I posted with a question roughly 11months ago. I talked to someone here when I had been playing for about roughly a year at that time. With the Duhamel case and all, I am hoping all this tax stuff clears up in the near future.

I wanted to know if anybody here, making roughly in the 100k range, what they are doing? That is are they 1) incorporating 2) Paying taxes at a personal tax rate 3) Not paying

Im really confused at the pros and cons of all these approaches and whether Im considered a pro. When does the expectation profit? I heard from some people that it can be pretty long. Game conditions globally have been changing a lot. And the truth is, for anyone playing 5-10 or higher, losing everything is not hard. All it takes is me spaz taking a shot and go on some tilty run and I could totally destroy my BR. Im sure we have seen yesterday's winners turn in to today's losers.

If I try to file it as personal income, do I need the CRA to accept my claim? Can I carry over losses and write them off? For how long? What is the process of claiming it as personal income? Have people been rejected?

I have consulted tax guru before and read the taxwiki book by the way, so its not like I'm coming without having done homework. Yet, I am confused since I guess I am at a inflection point. I have been living off poker winnings for a bit under two years. I make projected to make about 100k this year. I put in about 70-90hrs a month.

Does anyone have a financial advisor in Toronto who can show me a saavy way to go about my poker play?

it sounds as if you don't know how taxes are paid and processed. if you incorporate, you have to pay corporate tax, but all the dividends and/or salary you pay yourself through the company are deducted from the company's revenue before taxation. however, you will have to pay personal income taxes on that money you claim by salary or dividend.

i believe if you skim the posts in this thread over the past year, you'll get a good idea of whether you should start declaring tax and whether to incorporate. if you do decide to start declaring, look for a decent accountant to help you set up a corporation and declare your taxes.

i mentioned a few months ago that i was trying to get a mortgage using my poker revenue as proof of income. i have just received one from TD through a broker as a self-employed worker with poker being the main source of income. i was not asked once what my self-employment is. they asked for my T1 and notice of assessment for the past two years. and since my taxes were filed by a CA, they didn't bother to ask for anything further. it would have been much more difficult and expensive had i been incorporated (they would require an audit). I had roughly 18% down on the property and got the best advertised interest rate on a 5 year fixed.

I have a question for the experts in this thread. What are the rules in Canada for a situation where you don't expatriate and keep using your Canadian bank account for the hub of your electronic transactions but you live outside of the country for 11 months or more out of the year.

I know in the USA to meet the physical presence test, you must be out of the U.S. for at least 330 days in a 365 day period and have your tax home in a foreign country. If you are out of the U.S. for 330 days between Jan. 1 and Dec. 31, you're entitled to an exclusion of up to $91,400.

I'm in Quebec now and play poker full time, but my wife works for an international company that has offices in Manila, Philippines. I'm seriously considering moving there with her since it's particularly easy to get visas renewed and live there permanently. I'm getting really stressed about the tax season coming and the rates in Quebec are brutal.

Any advice about how to go about this and how it would work out for me would be greatly appreciated. Would I have to pay tax in the Philippines to be exempt in Canada..ect? Would be nice to just get some feedback in this thread for other people who might be thinking about this and before I actually put the plan in motion and pay for professional advice on this matter.

EDIT: Merry Christmas everybody !!!

Canada bases tax liability on residency. However, if you don't sever all ties to Canada, you are likely to still be considered a resident of Canada for tax purposes. Keeping your Canadian bank account (or a residence here, memberships in organizations, family, significant assets, plans to return, etc.) means you haven't severed the ties and wil be expected to pay tax on your worldwide income.

Any tax you pay to another country gets you a tax credit in Canada up to the amount of tax that would have been payable in Canada. If the Canadian tax rate is higher, you'll owe the difference here. If it is lower then you won't owe Canada anything.

Appreciate the quick response. Have a happy holiday season.