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Old 05-23-2011, 01:58 PM   #1676
daxile
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Re: Canadian Online Poker Tax Thread

so what i understand from this, taxation of poker online winnings in canada seems to be a gigantic grey area...

does ANYONE know definitively what the laws are and how much they tax on big winnings? I mean there's just so many thinsg to account for in poker, sure you can make six figures in a a year but then theres variance, bad beats, coolers, etc. I mean wtf people.
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Old 05-23-2011, 02:36 PM   #1677
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Re: Canadian Online Poker Tax Thread

As of right now, poker winnings are taxable if you are in the business of making money from poker, however casual poker winnings are non-taxable. Poker winnings are subject to the marginal tax rate.
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Old 05-23-2011, 03:14 PM   #1678
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Re: Canadian Online Poker Tax Thread

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Originally Posted by ebffs View Post
That sounds reasonable. You seem confident in your knowledge, you mind me asking what qualifications you have?
Formal qualifications: none.

I have no relevant degrees or certification.

Real-world qualfications: lots.

If I sound confident it is because I am confident. I avoid talking about things I don't know about.

I have many years of experience doing financial management of businesses I owned or co-owned and on a volunteer basis for multiple non-profit organizations. I have served on several boards of directors. I chaired a committee that set annual budgets of hundreds of millions of dollars. I spent many years in a role that required interpretation of statutes, regulations and policy documents, and drafting of same. I have exercised financial power of attorney and been an estate executor.

I have multiple personal contacts at CRA, and also know people working for CBSA and FinTRAC. I pay for financial advice whenever I need to. I have close ties to a broker and a CFP who tell me my knowledge is much greater than the vast majority of their clients.

I have done pro-bono work alone and together with CAs and CFPs, such as setting an organization's audit procedures, capital replacement plan for a condominum corporation, preparing income tax returns for new Canadians, and for family. I have never had CRA disagree with an income tax return I prepared for somebody else. One of the people I did pro-bono work with went on to become Auditor General of Ontario. I prepare my own tax return even though it is more complex than those of the vast majority of Canadians (certainly > 90th percentile). My family income is above the median, but our taxes paid are well below median for our gross income range - all done legally. I have never been audited by CRA.

Never rely on what I or any other poster on an internet forum tells you, no matter how well-informed they may seem or what qualifications they claim. If your ass is on the line, get paid advice from a properly certified accountant or tax lawyer.
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Old 05-23-2011, 09:36 PM   #1679
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Re: Canadian Online Poker Tax Thread

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Originally Posted by OutlawPro318 View Post
As of right now, poker winnings are taxable if you are in the business of making money from poker, however casual poker winnings are non-taxable. Poker winnings are subject to the marginal tax rate.
well if you earn a lot from poker can't you just claim you are playing it casually? i mean how does one define being in the "business of making money from poker".. jesus canada needs to be either strict or concrete with their laws. At least in the US you konw you're getting taxed regardless.
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Old 05-23-2011, 10:05 PM   #1680
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Re: Canadian Online Poker Tax Thread

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Originally Posted by DoTheMath View Post
I would think that the American job would have no impact on the taxability of his poker winnings in Canada.
Thank you. This was my take on it and just told him so before I read this.

I enjoyed reading you recent contributions in legislation and others and respect your opinion. Because of your interest in the BF/FT situation I did not realize you were Canadian. I just read your "qualifications" in this thread posted after your response to me. Thanks again.
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Old 05-24-2011, 01:56 AM   #1681
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Re: Canadian Online Poker Tax Thread

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Originally Posted by daxile View Post
well if you earn a lot from poker can't you just claim you are playing it casually? i mean how does one define being in the "business of making money from poker".. jesus canada needs to be either strict or concrete with their laws. At least in the US you konw you're getting taxed regardless.
Read this paper by a UoT law prof. The rules are clear, but the interpretation of them on a case by case basis is not.

Personally, I'm much happier with the Canadian approach. I believe the underlying philosophy is more well-founded and more just. Yes, that might also make it more ambiguous, but clear-cut is for television (or logging).
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Old 05-27-2011, 06:53 PM   #1682
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Re: Canadian Online Poker Tax Thread

Hi, I am pretty confused from what I have read the first few pages and this last few as well. I am a prospective U.S. citizen looking to go to school in Canada. I make a good living off of playing poker and have been playing for a while with decent results. I pay U.S. taxes. I would be using a Canadian bank to do withdrawals from my poker accounts. Then possibly bank to bank transfer to my U.S. banks. Can anyone help me out in terms of how my tax situation would work out? If not, can anybody refer me to somebody who can help me?
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Old 05-27-2011, 09:18 PM   #1683
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Re: Canadian Online Poker Tax Thread

IANAL, but from what I've read on Poker Legislation, your gambling income is still subject to US tax (since you must continue to pay tax on your worldwide income for at least 10 years after leaving the US for another country). The fact that you use Canadian banks to withdraw your online money is irrelevant.

The double taxation clause in the Canada/US tax treaty is a wonderful thing, though. You can write off the tax paid to the Canadian government as a deduction from your US taxes. In essence, the source income will be dinged at the higher of the two tax rates: Canadian or US. If the Canadian tax rate is lower, you'll owe the remainder to the US government. If the Canadian tax rate is higher, you'll end up owing nothing to the US government.

So, if you pay taxes in Canada on your gambling income, it will (in all likelihood) not be taxable in the United States, because we *generally* have higher tax rates (once provincial taxes are taken into account).

If you decide not to pay income on your gambling to the Canadian government because it's a hobby ... the US government will still be looking for its cut of your gambling income, and you will have no Canadian taxes to write off against it.

That's the layman's version of it. However, you'll need the help of Russ Fox or the equivalent posters from Poker Legislation to sort that mess out. Locally, PWC usually charges about $600/hr to deal with cross-border tax situations for American citizen. Most of my US friends from the office have had to pay low-four figures for their IRS and CRA returns. It is expensive because a fair number of accountants (and virtually all non-professional tax preparers in Canada) are not qualified / do not understand the ins and outs of both US and Canadian tax law.

(If you are aware of all the ramifications/rules and regulations and I've made an error, please correct me.)
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Old 05-29-2011, 02:40 AM   #1684
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Re: Canadian Online Poker Tax Thread

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Originally Posted by SlightlyMad View Post
IANAL, but from what I've read on Poker Legislation, your gambling income is still subject to US tax (since you must continue to pay tax on your worldwide income for at least 10 years after leaving the US for another country). The fact that you use Canadian banks to withdraw your online money is irrelevant.

The double taxation clause in the Canada/US tax treaty is a wonderful thing, though. You can write off the tax paid to the Canadian government as a deduction from your US taxes. In essence, the source income will be dinged at the higher of the two tax rates: Canadian or US. If the Canadian tax rate is lower, you'll owe the remainder to the US government. If the Canadian tax rate is higher, you'll end up owing nothing to the US government.

So, if you pay taxes in Canada on your gambling income, it will (in all likelihood) not be taxable in the United States, because we *generally* have higher tax rates (once provincial taxes are taken into account).

If you decide not to pay income on your gambling to the Canadian government because it's a hobby ... the US government will still be looking for its cut of your gambling income, and you will have no Canadian taxes to write off against it.

That's the layman's version of it. However, you'll need the help of Russ Fox or the equivalent posters from Poker Legislation to sort that mess out. Locally, PWC usually charges about $600/hr to deal with cross-border tax situations for American citizen. Most of my US friends from the office have had to pay low-four figures for their IRS and CRA returns. It is expensive because a fair number of accountants (and virtually all non-professional tax preparers in Canada) are not qualified / do not understand the ins and outs of both US and Canadian tax law.

(If you are aware of all the ramifications/rules and regulations and I've made an error, please correct me.)
IAANAL. All this seems correct, except it fails to point out the intersection between tax and immigration law. Poker is taxable in Canada only if you are running a poker business. You cannot run a business in Canada unless you have citizenship, permanent residency, or a work visa. Conclusion: if you are here as a visitor and the government decides you have to pay taxes on your winnings, they will also decide to kick you out, and probably won't let you back for a while, if ever. It seems unlikely to me that the government would have an opportunity to decide you are running a poker business if you are here less than 6 months and do not draw the government's attention to it.
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Old 05-29-2011, 04:00 AM   #1685
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Re: Canadian Online Poker Tax Thread

I am going to be living there on a student visa.
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Old 05-29-2011, 12:18 PM   #1686
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Re: Canadian Online Poker Tax Thread

So to finalize things for the moment.

If you are in the business of poker or if it is your primary/sole source of income then winnings are taxable.

If you already have a primary source of income, or if you are just a casual gambler then your wininings are non-taxable.

Even if you are in the business of poker, the government or its agents will still have to prove that you are in the business of poker.

And according to Benjamin Alarie's The Taxation of Poker Winnings in Canada, no one has lost in court and has been proven to be in the business of poker in Canada as of yet.
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Old 05-29-2011, 01:02 PM   #1687
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Re: Canadian Online Poker Tax Thread

Did anyone save Benjamin Alarie's ebook to file? I need to read it again, and I sure as heck aint paying to view it.
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Old 05-29-2011, 02:40 PM   #1688
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Re: Canadian Online Poker Tax Thread

I am planning on seeking legal advices from several tax lawyers on the subject aforementioned. Hopefully, they can give better advice.
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Old 05-29-2011, 02:45 PM   #1689
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Re: Canadian Online Poker Tax Thread

The closest tax lawyer in my area is:
http://www.dioguardi.ca/

Any thoughts?
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Old 05-29-2011, 03:49 PM   #1690
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by OutlawPro318 View Post
So to finalize things for the moment.

[net winnings are taxable ]
If you are in the business of poker
Yes

Quote:
Originally Posted by OutlawPro318 View Post
or if it is your primary/sole source of income
Not necessarily. Just because you made money at poker and at nothing else, doesn't always mean that you were running a business. You could still be an unemployed casual gambler.

Quote:
Originally Posted by OutlawPro318 View Post
If you already have a primary source of income, or if you are just a casual gambler then your wininings are non-taxable.
Having another, (even larger), source of income doesn't mean you are not also running a poker business.

Quote:
Originally Posted by OutlawPro318 View Post
Even if you are in the business of poker, the government or its agents will still have to prove that you are in the business of poker.
... to obtain penalties from you if you fail to pay. You are required to pay taxes if you are in the busines of poker whether or not the feds have actually proved it in court.

Quote:
Originally Posted by OutlawPro318 View Post
And according to Benjamin Alarie's The Taxation of Poker Winnings in Canada, no one has lost in court and has been proven to be in the business of poker in Canada as of yet.
Perhaps because every time they told someone to pay it was such a slam-dunk case that fighting it in court would have been a waste of time and money. The definiton of a poker business is such a high bar that there are not too many who reach it. So don't expect that there ought to be a whole lot of cases. There are people paying income tax on a poker busness, because they have to. It does happen. Don't take the absence of court cases as a sign you don't have to pay.
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Old 05-29-2011, 03:51 PM   #1691
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Re: Canadian Online Poker Tax Thread

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Originally Posted by OutlawPro318 View Post
Did anyone save Benjamin Alarie's ebook to file? I need to read it again, and I sure as heck aint paying to view it.
See post # 1656 ITT.
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Old 05-29-2011, 04:14 PM   #1692
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Re: Canadian Online Poker Tax Thread

Soo the best option for canadians is to avoid paying taxes until you get caught? Paying rake is enough, im not paying any taxes on my winnings.

Any tips on staying "under the radar"? I try to only make small cashouts at a time, never anything more than 2k, plus I keep my bank empty. Not sure if any of that helps..
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Old 05-29-2011, 05:46 PM   #1693
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Re: Canadian Online Poker Tax Thread

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Originally Posted by DoTheMath View Post
Yes

Not necessarily. Just because you made money at poker and at nothing else, doesn't always mean that you were running a business. You could still be an unemployed casual gambler.

Yes, but how do you define "casual gambler"

Having another, (even larger), source of income doesn't mean you are not also running a poker business.

Doesn't it? I mean if you are already pre-occupied with another source of income most of the time then how can you possibly be running a poker business

... to obtain penalties from you if you fail to pay. You are required to pay taxes if you are in the busines of poker whether or not the feds have actually proved it in court.

Yes, but who defines who is in the poker business or not? Is that not up to the feds to prove in the first place?

Perhaps because every time they told someone to pay it was such a slam-dunk case that fighting it in court would have been a waste of time and money. The definiton of a poker business is such a high bar that there are not too many who reach it. So don't expect that there ought to be a whole lot of cases. There are people paying income tax on a poker busness, because they have to. It does happen. Don't take the absence of court cases as a sign you don't have to pay.

I have yet to hear from anyone who pays income tax on a "poker business". I'm sure it happens, but we need to know how that happens.
Read up
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Old 05-29-2011, 08:12 PM   #1694
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Re: Canadian Online Poker Tax Thread

'Gambler gambles with taxman - and loses':

http://www.financialpost.com/persona...699/story.html

Not sure if there is anything new in here that we already don't know, but posting it anyway.
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Old 05-30-2011, 07:15 AM   #1695
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Re: Canadian Online Poker Tax Thread

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Originally Posted by OutlawPro318 View Post
Originally Posted by DoTheMath
Yes

Not necessarily. Just because you made money at poker and at nothing else, doesn't always mean that you were running a business. You could still be an unemployed casual gambler.

Yes, but how do you define "casual gambler"

You are either a person running a poker business, or you are not. By "casual gambler" I meant any person with gambling income who is not running a gambling business.

Having another, (even larger), source of income doesn't mean you are not also running a poker business.

Doesn't it? I mean if you are already pre-occupied with another source of income most of the time then how can you possibly be running a poker business

The same way anybody else runs a business while making more money some other way as well. I'm pretty sure I've done it, though the business wasn't poker.

... to obtain penalties from you if you fail to pay. You are required to pay taxes if you are in the business of poker whether or not the feds have actually proved it in court.

Yes, but who defines who is in the poker business or not? Is that not up to the feds to prove in the first place?

No. It is up to the taxpayer to correctly report source income in the first place. Willfully failing to do so is an offence.

Perhaps because every time they told someone to pay it was such a slam-dunk case that fighting it in court would have been a waste of time and money. The definiton of a poker business is such a high bar that there are not too many who reach it. So don't expect that there ought to be a whole lot of cases. There are people paying income tax on a poker busness, because they have to. It does happen. Don't take the absence of court cases as a sign you don't have to pay.

I have yet to hear from anyone who pays income tax on a "poker business". I'm sure it happens, but we need to know how that happens.

It happens in two ways. Most of the time it happens when people read the rules and decide (perhaps with professional advice) the definition of running a poker business applies to them and they do not want to attempt tax evasion. Perhaps sometimes it happens because of a CRA review/audit and CRA decides the definition of running a poker business applies to the taxpayer. I doubt the latter happens very often.


Read up
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Old 05-30-2011, 08:45 AM   #1696
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Re: Canadian Online Poker Tax Thread

lol if it is up to the person to report it and there has not been anyone who has been punished for not reporting, then nobody will be paying any taxes.

I currently know at least 5 people that make 300k a year, I'd say they are in the poker business and they do not pay a cent.


ALSO, you can't just say that you are either in the business of poker or not. That is way too black and white, which is OBVIOUSLY not what is going on right now. Everybody I know calls poker winnings legality as a "gray" area or extremely shady stuff.
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Old 05-30-2011, 03:44 PM   #1697
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Re: Canadian Online Poker Tax Thread

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lol if it is up to the person to report it and there has not been anyone who has been punished for not reporting, then nobody will be paying any taxes.

I currently know at least 5 people that make 300k a year, I'd say they are in the poker business and they do not pay a cent.


ALSO, you can't just say that you are either in the business of poker or not. That is way too black and white, which is OBVIOUSLY not what is going on right now. Everybody I know calls poker winnings legality as a "gray" area or extremely shady stuff.
What? You mean there are people who evade taxes? That's shocking!
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Old 05-30-2011, 04:25 PM   #1698
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Re: Canadian Online Poker Tax Thread

funny but still not clear cut enough, i wish they would just make up their minds about this subject
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Old 05-30-2011, 07:40 PM   #1699
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Re: Canadian Online Poker Tax Thread

I'm still confused as to whether I'd need to pay taxes as a student who is a U.S. citizen and on a student visa and how that would work for me...? Can I run a gambling business while being a student? Either way I don't think I'll end up paying more than I normally would. Because of the dual tax agreement or whatever. I just don't want to get deported from Canada to never be able to return.
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Old 05-31-2011, 01:02 AM   #1700
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Re: Canadian Online Poker Tax Thread

Being a student or having other income has nothing to do with it. If you have a reasonable expectation of profit (this is the grey area) you owe tax regardless of any other issues. Making other money does not somehow make your income gambling winnings.
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