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.

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.

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.

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.

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.

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).

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?

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.

I am going to be living there on a student visa.

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.

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.

I am planning on seeking legal advices from several tax lawyers on the subject aforementioned. Hopefully, they can give better advice.

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

Any thoughts?

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.

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

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.

See post # 1656 ITT.

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..

Read up

'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.

.

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!

funny but still not clear cut enough, i wish they would just make up their minds about this subject

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.

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.