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Old 06-02-2011, 11:05 AM   #1701
Stake Monster
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Re: Canadian Online Poker Tax Thread

I got a letter of assessment from the CRA today. It's refunding me $8.03 on my taxes and says that I have some amount of unused net captial losses from other years. Also says I exceeded my TSFA amount for 2010.

The fun part is that there's a box at the top that says: "at a later date we may review your return to verify income you reported or deductions and credits you claimed"

I've been filing (rightfully) as a graphic designer for 10 years now. I pay taxes every year as a designer. Should I be in the least worried about an audit? Or is that just a std thing to put on such letters when changes were made to my tax owed total? What should I prepare in case they audit me?

edit: I looked on the CRA website and apparently "review" and "audit" are two very different things. http://www.cra-arc.gc.ca/nwsrm/rlss/...00603-eng.html 2.4M returns were "reviewed" in 2008.

Last edited by Stake Monster; 06-02-2011 at 11:12 AM.
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Old 06-16-2011, 12:12 AM   #1702
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Re: Canadian Online Poker Tax Thread

http://www.theglobeandmail.com/news/...rticle2062557/

http://www.canlii.org/en/ca/tcc/doc/...011tcc262.html

Could the experts discuss on this? Thx.
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Old 06-16-2011, 02:41 PM   #1703
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Re: Canadian Online Poker Tax Thread

did u read the article? i thought it was pretty clear. what did u want to discuss?

looks like cohen was a complete moron and thought he could make millions by reading a few books and jumping right in, there was no business plan at all, lost every month, i mean i'm just repeating the article, like I said I thought it was pretty clear.
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Old 06-16-2011, 04:46 PM   #1704
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Re: Canadian Online Poker Tax Thread

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Originally Posted by QuarterTon View Post
did u read the article? i thought it was pretty clear. what did u want to discuss?

looks like cohen was a complete moron and thought he could make millions by reading a few books and jumping right in, there was no business plan at all, lost every month, i mean i'm just repeating the article, like I said I thought it was pretty clear.
That's exactly what I did and happened to me before I went on to make a lot of money consistently over the years. This guy even quit his job specifically for the purpose of being able to focus on it full time. I was just a student when I started. Yet I am considered a pro.

Pretty sure a lot of the pros of today didn't even go in with the idea of "I'm going to start a business" when they first started. It just sort of worked out that way. If anything this guy has more of a right than some of the pros of today if you compare the way they started.

I don't see how it's clear at all.
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Old 06-16-2011, 06:10 PM   #1705
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Re: Canadian Online Poker Tax Thread

The guy probably shouldn't have claimed such large losses on "his first year" of playing.

If he had been playing and making money consistently over the years, then he would qualify more as a pro.
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Old 06-16-2011, 06:23 PM   #1706
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Re: Canadian Online Poker Tax Thread

oh man.... MattC did u read the links??

in the 2nd link it specifically says that the guy DIDNT quit his job, he avoided working and taking on extra work until they FIRED him, and as part of the severance terms if he found new work or STARTED A NEW BUSINESS his severance payments would be drastically reduced. He continued accepting payments until they ran out in OCT of 2006, so almost the entire year that he claims he had this new business.

So what is it? He started a new poker business and went "pro" for the year 2006 and has 122k in losses he can claim in which case he's committed FRAUD by accepting his severance pay (116.67k in 7 months) or he didnt start a poker business and just lost 122k while getting 116.67k in severance pay?

I mean dont get me wrong, I know that you guys want to know where does one draw the line between a pro and recreational player, however as its been stated in this thread quite a few times that there are a bunch of criteria that you have to meet in order to be considered taxable. But yeah even then its debatable.

Currently I pay taxes on my poker earnings so this question is relevant to me as well. But poker is my sole source of income and has been for years, my situation meets those criteria put forth by the government, and I've talked to Professor Ben Alarie at U of T about my situation specifically, bottom line for me legally I'm supposed to pay taxes
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Old 06-16-2011, 10:58 PM   #1707
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Re: Canadian Online Poker Tax Thread

If you are Canadian and stake players in cash games, or buy action from tournaments, are either of those taxable? Are they treated the same as just playing poker, or is it different?
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Old 06-17-2011, 12:15 AM   #1708
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Re: Canadian Online Poker Tax Thread

Apologize, it didn't say that in the article I looked at.
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Old 06-17-2011, 06:20 AM   #1709
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Re: Canadian Online Poker Tax Thread

Conceptually the treatment of staking maps on to the treatment of poker winnings.

If the player being staked is professional and has a REOP, then by staking that player you would have a REOP and you should be taxable on staking gains (and staking losses should be deductible).

If the player being staked is a recreational player, then by staking that player you would not have a REOP and any staking gains should not be taxable (and staking losses should not be deductible).

I believe that any other approach to the question would allow for work-arounds.

I should mention that in addition to the tax issues, staking could result in securities law issues. I'm cringing just thinking about running these staking arrangements through an "investment contract" analysis...
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Old 06-17-2011, 09:22 AM   #1710
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Re: Canadian Online Poker Tax Thread

the government should really make it clear cut like in the U.S.
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Old 06-18-2011, 04:54 AM   #1711
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Re: Canadian Online Poker Tax Thread

fwiw, I recently talked to a Canadian tax accountant in a big consulting firm about this. She did some research and told me the following.

Quote:
The CRA has a two-stage approach in determining whether certain activities are considered taxable.

1) Is there a personal element to the activity (i.e. is it a hobby) or is there a pursuit of profit?

2) If there is no personal element to the activity, is the source of income from a business?

The key is trying to prove #1; generally if you've gotten to #2 then you have business-source income, which is taxable. If there is a personal element, there needs to be some sort of proof that the activity is not so habitual that it has elements of a 'pursuit of profit'. So they would look at such things as how often he plays, evidence of business-like behaviour when playing poker, if he has any other sources of income, etc. He needs to be able to show that it's a hobby, not his livelihood. The 'reasonable expectation of profit' is no longer the underlying test in law to determine whether an activity is a source of business income.
Also, I called the CRA and just asked them. The lady who replied asked her supervisor, who essentially literally said "no, you don't have to pay taxes on it, online poker is exactly like the lottery".
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Old 06-18-2011, 05:01 AM   #1712
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Re: Canadian Online Poker Tax Thread

So if the guy in the case goes on to crush from here on out to win millions does he now get a free pass because the courts already determined he doesnt have a reasonable expectation to profit?
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Old 06-18-2011, 09:37 AM   #1713
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Re: Canadian Online Poker Tax Thread

That is the dumbest thing I have ever heard of.

Part of the reason why people play poker in the first place is to make money. Without the money part, people wouldn't play to begin with. It's just naturally part of playing poker.
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Old 06-19-2011, 05:31 PM   #1714
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Re: Canadian Online Poker Tax Thread

I don't understand what was difficult to understand about that article. If you are a complete moron you can't claim businesses losses -- this is true for gambling but also for any business where you have no reasonable expectation of profit.

The situations where this applies are not very common but take something like say raising animals -- say you really love Bulldogs and you run a Bulldog farm. The business model is such that you have no reasonable expectation of making a profit but you do it anyway because you love the dogs -- you don't get to claim that as a business loss.

In the same would apply to something even like being a landlord. If you choose to engage in the renting of property in such a way that there is no reasonable expectation of profit then you don't get the business loss.

These kinds of situations are fairly rare since you'll usually bankrupt yourself or quit the businesses before the CRA questions your business model. Normally the disallowing of business losses only happens when there is some emotional reason for why you are doing the activity.
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Old 06-20-2011, 09:59 PM   #1715
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by CompEng View Post
Also, I called the CRA and just asked them. The lady who replied asked her supervisor, who essentially literally said "no, you don't have to pay taxes on it, online poker is exactly like the lottery".
Can you specify what she meant by "it"? If I play poker I don't need to pay taxes because it's like lottery to the CRA? I doubt it, but i wish.
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Old 06-20-2011, 10:16 PM   #1716
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Re: Canadian Online Poker Tax Thread

The people you get when you call CRA are of no value. I called CRA over a CCA question earlier this year and the customer service rep did not know the answer so they upgraded me to a supervisor who also did not know the answer so told me someone else would call me back.

A woman did call me back a few days later and originally gave me one answer. When I explained my reasoning she switched her answer because I sounded like I knew what I was talking about. I was dumbfounded -- yes I know more than the average person who calls but the reason I was calling was because I didn't know the answer to this and before I did someone's business taxes I wanted clarification. That she started off with A and then switched to Not-A just because I sounded confident was laughable.
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Old 06-20-2011, 10:23 PM   #1717
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Re: Canadian Online Poker Tax Thread

On the new Loto Quebec espacejeux online poker site it says in the FAQ you do not have to pay tax on your winnings. But to cash out any amount over and including a measly $1000 it is MANDATORY to write in your occupation.

....stealth loto quebec.
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Old 06-20-2011, 10:29 PM   #1718
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Re: Canadian Online Poker Tax Thread

So does anyone know a tax lawyer in Canada who could us poker players with all this CRA stuff? I'd love to have someone who I can refer to for things like this.
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Old 06-20-2011, 10:33 PM   #1719
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Re: Canadian Online Poker Tax Thread

That isn't for tax reasons but rather for money laundering. $1000 seems low but if you go into any Ontario or Quebec casino and buy in or cash out for large amounts on a regular basis an employee will come over and demand a lot of personal information.

With respect to Loto Quebec's claim again it means nothing although depending on how the game is structured and what the rake is it might actually be true for their site. Pro-line for example is so horribly stacked against the player that it is not taxable since with such horrible odds and rules no player can have a reasonable expectation of profit. With a high enough rake the same would be true for poker.
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Old 06-21-2011, 01:17 AM   #1720
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Re: Canadian Online Poker Tax Thread

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Originally Posted by ebffs View Post
On the new Loto Quebec espacejeux online poker site it says in the FAQ you do not have to pay tax on your winnings.
this is pretty awsome that they say this.
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Old 06-21-2011, 02:22 AM   #1721
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Re: Canadian Online Poker Tax Thread

Quote:
Originally Posted by Henry17 View Post
That isn't for tax reasons but rather for money laundering. $1000 seems low but if you go into any Ontario or Quebec casino and buy in or cash out for large amounts on a regular basis an employee will come over and demand a lot of personal information.

With respect to Loto Quebec's claim again it means nothing although depending on how the game is structured and what the rake is it might actually be true for their site. Pro-line for example is so horribly stacked against the player that it is not taxable since with such horrible odds and rules no player can have a reasonable expectation of profit. With a high enough rake the same would be true for poker.
I can understand in casinos where you can just hand someone a bunch of chips and there is no record anywhere of how/why those chips changed hands. But it's much harder online, especially at espace. Deposit options are limited to credit card (after a credit check) and your bank account. Cashout is only to your bank account (not like the myriad of ewallets on other sites). Player to player transfers are not allowed as far as I can see. Chip dumping is very obvious. You can deposit $9999/week, no questions asked, but you must disclose your occupation if you cash out just 1k. Maybe they should ask occupation for people depositing. You know, wow this guy says he's a bartender but he wants to deposit the max 10k weekly, maybe we should keep on eye on him and make sure he's not chip dumping. But even bad players can turn a modest deposit into over 1k with a bit of run good.

I just think of all the ways they have at their disposal to detect and deal with money laundering on a site as tightly run as espace, making people list their occupation compulsory for any cash out over 1k seems pretty extraneous....but it's the one question that has any significance to the current tax law in our country...pretty big coincidence.
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Old 06-21-2011, 05:43 AM   #1722
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Re: Canadian Online Poker Tax Thread

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Originally Posted by homeboy604 View Post
this is pretty awsome that they say this.
doesn't change the laws though..
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Old 08-02-2011, 12:46 PM   #1723
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Re: Canadian Online Poker Tax Thread

Are the American's coming up here subjecting themselves to any Tax Liabilities? Since they are all coming up as professionals already, with the express purpose of playing poker for profit, would that make them less ambiguous under the tax laws?
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Old 08-02-2011, 09:17 PM   #1724
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Re: Canadian Online Poker Tax Thread

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Originally Posted by Roger Mainfield View Post
Are the American's coming up here subjecting themselves to any Tax Liabilities? Since they are all coming up as professionals already, with the express purpose of playing poker for profit, would that make them less ambiguous under the tax laws?
Was asking about that in this thread a couple months back, sounds like it depends on whether it's income from a source, and is that source of income considered Canada when you're playing online? I would think not, but who knows. That could get super-complicated.
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Old 08-06-2011, 01:01 PM   #1725
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Re: Canadian Online Poker Tax Thread

I'm sure as hell not going through the whole thread, but when I took Introductory Tax in law school in 1993-94, the law was absolutely black and white: gambling winnings are classified as "windfall", like a lottery, and are not a "source".

"Source" has a technical definition. If you're running a poker game and taking a rake, that would be included in the definition. But if you're playing in it as well, and winning money, that wouldn't. (By the way, you'd be committing a criminal offence if you didn't have a license to run the game from the provincial Attorney General.)

As far as I know, the law in this area hasn't changed in the last 17 years.

Here's how you know whether I'm right or wrong: British Columbia has had some large tournaments over the last few years. I recall Daniel Negreanu won one, over $300,000. If poker winnings were taxable, the casino would have been required to hold back the taxable portion of all winnings paid out over a certain amount (don't know where CCRA would set the limit), like they do in Vegas.

Were any of the readers among the top place finishers in that/those tournaments? Any money held back?
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