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Old 08-06-2011, 01:06 PM   #1726
TaxGuru
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Re: Canadian Online Poker Tax Thread

Spreading this kind of partly informed misinformation is not helpful. Read this instead: http://ssrn.com/abstract=1809270
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Old 08-07-2011, 12:27 AM   #1727
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Re: Canadian Online Poker Tax Thread

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Originally Posted by TaxGuru View Post
Spreading this kind of partly informed misinformation is not helpful. Read this instead: http://ssrn.com/abstract=1809270
Yeah, you might want to read it yourself. I like the part on page two that says,

"...finding of a business of gambling has been relatively rare and the threshold appears to have been a very high one in the reported cases. In fact, as demonstrated in Part II.B, which addresses how the courts have tended to approach the question of the taxation of gambling gains in the recent past, it is shown that there have been no reported cases finding that gains from card playing or horse betting are income subject to income tax for several decades. Indeed, in the entire body of reported case law on the question there are only a small number of cases have taxpayers been found to have a gambling business and therefore subject to income tax on gambling gains (except where the taxpayers have been bookmakers or the “house” rather than an individual gambler)"

Sounds suspiciously the same as what I said in my post.

People are looking for practical advice here, not the answer to a law school exam. It's not unreasonable to expect that CCRA's practises and policies may soon change to catch up with technology... well, the technology that existed 15 years ago, if their history is any guide to their future. Poker now is a far cry from where poker was when most of the leading cases were decided, and by 2020 or so, the ITA may come around to recognizing this thing called the internet and how money moves around electronically can now be reliably tracked. But for crying out loud, anybody who's advising a client, "Yes, clearly you should be declaring poker winnings as income and paying tax on it" is guilty of professional negligence.
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Old 08-07-2011, 01:03 AM   #1728
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Re: Canadian Online Poker Tax Thread

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Originally Posted by j_crowhurst View Post
Yeah, you might want to read it yourself. I like the part on page two that says,

"...finding of a business of gambling has been relatively rare and the threshold appears to have been a very high one in the reported cases. In fact, as demonstrated in Part II.B, which addresses how the courts have tended to approach the question of the taxation of gambling gains in the recent past, it is shown that there have been no reported cases finding that gains from card playing or horse betting are income subject to income tax for several decades. Indeed, in the entire body of reported case law on the question there are only a small number of cases have taxpayers been found to have a gambling business and therefore subject to income tax on gambling gains (except where the taxpayers have been bookmakers or the “house” rather than an individual gambler)"

Sounds suspiciously the same as what I said in my post.

People are looking for practical advice here, not the answer to a law school exam. It's not unreasonable to expect that CCRA's practises and policies may soon change to catch up with technology... well, the technology that existed 15 years ago, if their history is any guide to their future. Poker now is a far cry from where poker was when most of the leading cases were decided, and by 2020 or so, the ITA may come around to recognizing this thing called the internet and how money moves around electronically can now be reliably tracked. But for crying out loud, anybody who's advising a client, "Yes, clearly you should be declaring poker winnings as income and paying tax on it" is guilty of professional negligence.
You really should read this thread before you keep making a fool of yourself. It's not a tough read. The professor who wrote that article posts in here regularly. Your points are banal and you're beating a dead horse.
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Old 08-07-2011, 11:49 AM   #1729
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Re: Canadian Online Poker Tax Thread

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But for crying out loud, anybody who's advising a client, "Yes, clearly you should be declaring poker winnings as income and paying tax on it" is guilty of professional negligence.
Actually the opposite is true. If you don't tell a professional poker player that they legally have to declare the income and pay taxes on it you would be negligent. That professional poker players are required to pay income tax in Canada is not open to debate.
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Old 08-07-2011, 01:49 PM   #1730
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Re: Canadian Online Poker Tax Thread

It is my understanding that the definition of professional poker player is what is unclear. That it is a matter of interpretation.

Not only that you profit, but that you also have an expectation of profit. I don't recall if it also has to be the majority of one's income.

So if you're an average Joe and you luckbox a tourny, I assume it is not taxable. Is that correct?
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Old 08-07-2011, 02:10 PM   #1731
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Re: Canadian Online Poker Tax Thread

so with black friday + possible legal US sites running in 1-2 years and provincial lottery sites offering poker having super low traffic what are the odds of the government coming down on the ability of canadians to play on all the gambling sites in the next 3-4 years?
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Old 08-07-2011, 02:17 PM   #1732
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Re: Canadian Online Poker Tax Thread

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Actually the opposite is true. If you don't tell a professional poker player that they legally have to declare the income and pay taxes on it you would be negligent. That professional poker players are required to pay income tax in Canada is not open to debate.
Henry, it's not that simple. It's a complicated question in terms of the legal theory, as the paper the Professor posted the link to outlines, and the practical aspect even moreso. Any advice given would have to take into account the consequences of any action/inaction, whether the person would be looking at a prosecution or just an audit, what penalties they might face should CCRA rule against them.

If you're correct on the bare statement "professional poker players are required to pay income tax in Canada" (presumably you meant on their net poker winnings), that's really just the first of many, many steps in the process of giving actual practical advice. The big question is, are you a professional?

Lots of people who think they are really aren't -- they fish out in a tournament and score a big win, but basically are marginal players on a day-to-day basis. If Chris Moneymaker or Jamie Gold were Canadian, would they have been considered professional poker players one year after their WSOP win? I don't know that the answer would obviously have been "yes" -- they were both outmatched after about day two, and basically lucked their way into their titles.

For 99% of "professionals", there are so many ways around whatever position CCRA would take that it would make your head spin. At the end of the day, when it comes to giving legal advice, the answer in the classroom is the starting point, not the end point.

As for the guy who said I should read the entire thread, no, I don't believe I will. I spend pretty much every day in a courtroom, so I'm not interested in reading hundreds of pages of opinions on legal matters by people with no legal training.

Bottom line: if you're making a lot of money playing poker, and you want advice on the tax implications, don't ask a professor, don't ask a lawyer who doesn't specialize in tax (like me), and for Christ's sake, don't post on an internet forum. Go see a lawyer who practises in the area of tax law.
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Old 08-07-2011, 02:29 PM   #1733
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Re: Canadian Online Poker Tax Thread

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so with black friday + possible legal US sites running in 1-2 years and provincial lottery sites offering poker having super low traffic what are the odds of the government coming down on the ability of canadians to play on all the gambling sites in the next 3-4 years?
The DOJ's processes for combatting organized crime, high-level commercial fraud, and money laundering is very highly evolved. Black Friday was a pretty high-end move. Canada's is considerably less so, so any equivalent to Black Friday will likely wait until we master the simpler stuff.

To put it into some perspective, the status of the Hell's Angels under Canadian law is that they are an organization of motorcycle enthusiasts. Period. Our Department of Justice couldn't get a ruling that they fall within the category of a "criminal enterprise organization". We're still trying to figure out how we can seize houses found with m.j. grow-ops in them, when the law is black-and-white that the government has the legal authority to do that.

To compare it to medicine, prosecution in the U.S. uses MRI's and genetic analysis. Prosecution in Canada uses bloodletting and leeches. Sometimes I think we've made no progress since the days we threw people in a lake to see if they float.
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Old 08-07-2011, 02:46 PM   #1734
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Re: Canadian Online Poker Tax Thread

j_crowhurst,

The reasoning with Gold and Moneymaker is really horrible. First, winning WSOP in no way makes you a professional player. Since you are claiming to be a lawyer you should know that.

That and a few other parts of your post make it quite clear to me that you are not a lawyer. If you wish to keep ranting please feel free to but you don't understand the topic and you are spreading bad information which could cause people harm.
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Old 08-07-2011, 02:56 PM   #1735
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Re: Canadian Online Poker Tax Thread

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Actually the opposite is true. If you don't tell a professional poker player that they legally have to declare the income and pay taxes on it you would be negligent. That professional poker players are required to pay income tax in Canada is not open to debate.
If you can tell me who has a reasonable expectation to profit between durrrr and isildur I'll agree its not open to debate. They can't both have a reasonable expectation to profit if they only play each other but they could both easily be losers seeing as they pay about $300 in rake per hour.
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Old 08-07-2011, 03:01 PM   #1736
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Re: Canadian Online Poker Tax Thread

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If you can tell me who has a reasonable expectation to profit between durrrr and isildur I'll agree its not open to debate. They can't both have a reasonable expectation to profit if they only play each other but they could both easily be losers seeing as they pay about $300 in rake per hour.
That has zero to do with how the test for being a professional works.
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Old 08-07-2011, 03:59 PM   #1737
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Re: Canadian Online Poker Tax Thread

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That has zero to do with how the test for being a professional works.
Whats the test? Did you win money, yes or no, if yes you owe taxes. Is that it?

Maybe thats enough for some judges, some others may want to look at the question in a little more depth.

The sticking point for me is the word "expectation" which to me means you need to be able to prove how someone is a favorite not just look at their past results.

I'll add one more thing. I agree that most times if it went to court it would be decided that you have to pay taxes but it could only be decided on a case by case basis. Because of that fact alone a judge may decide to not open that can of worms and say its not taxable income.

Last edited by roy_miami; 08-07-2011 at 04:08 PM.
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Old 08-07-2011, 04:08 PM   #1738
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Re: Canadian Online Poker Tax Thread

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Whats the test? Did you win money, yes or no, if yes you owe taxes. Is that it?
No. There is a four part test. It has been discussed in this topic in detail.
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Old 08-07-2011, 04:15 PM   #1739
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Re: Canadian Online Poker Tax Thread

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No. There is a four part test. It has been discussed in this topic in detail.
So if durrr an isildur decide to just play each other for 10 million hands a year for the next ten years which one of them has a reasonable expectation to profit based on this test?
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Old 08-07-2011, 04:24 PM   #1740
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Re: Canadian Online Poker Tax Thread

I know very little about those two players but if two equally matched players decided to pursue a plan like that then neither would be consider a professional. That type of behaviour is better explained by ego than anything else. Just because you have the skills to be a professional at something does not mean that your are actually pursuing that venture as a business.
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Old 08-07-2011, 04:34 PM   #1741
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Re: Canadian Online Poker Tax Thread

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Originally Posted by j_crowhurst View Post
Bottom line: if you're making a lot of money playing poker, and you want advice on the tax implications, don't ask a professor, don't ask a lawyer who doesn't specialize in tax (like me), and for Christ's sake, don't post on an internet forum. Go see a lawyer who practises in the area of tax law.
As someone who refuses to read the thread and has posted just a handful of confidently written but loosely reasoned posts, it's not at all clear that you can "bottom line" anything here. On the other hand, I would agree with you that professional advice on this question is essential.
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Old 08-07-2011, 05:07 PM   #1742
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Re: Canadian Online Poker Tax Thread

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j_crowhurst,

The reasoning with Gold and Moneymaker is really horrible. First, winning WSOP in no way makes you a professional player. Since you are claiming to be a lawyer you should know that.

That and a few other parts of your post make it quite clear to me that you are not a lawyer. If you wish to keep ranting please feel free to but you don't understand the topic and you are spreading bad information which could cause people harm.
You're absolutely right. I should know better. That was actually one of the questions on the bar exam -- "If you win the World Series of Poker, are you a professional poker player?" Get that one wrong, and you don't get to be a lawyer. Clearly I just guessed right on that point. As a point of honour, I'll submit my resignation to my Provincial law society immediately.

And I can't believe I was so stupid as to recommend that people actually go to a qualified legal professional for advice on legal matters, as opposed to seeking it from anonymous random people on the Internet. Again, I'm ashamed of myself.
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Old 08-07-2011, 05:14 PM   #1743
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Re: Canadian Online Poker Tax Thread

You actually said you were an expert on tax law so yes you should know the criteria for what constitutes a professional gambler or at least have the good sense to not post in a topic about the topic without putting in the effort to research the criteria.

Seeking professional advice is never a bad thing but the vast majority of people reading this topic never will. At least three of us have LLBs and know the topic well so it isn't like they are seeking advice from people who have no experience on the issue.
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Old 08-07-2011, 08:48 PM   #1744
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Re: Canadian Online Poker Tax Thread

You must be joking. I said exactly what my background was: I took tax law in law school in 1993, I claimed no "expertise" beyond that.

I'm not hiding behind an alias here, I'm posting under my real name. I don't live in "Free Hugs!!!!", and if you don't know how to determine, in less than 30 seconds, that I'm a lawyer, then, my friend, you may have an LLB, but you aren't a lawyer.

I don't know what possessed me to get involved in posting in this thread. On the brighter side, it got the ******* professor to post the article he wrote which, as far as I can tell, affirms nothing more than a speculative basis for possible liability for an extremely small number of people in Canada -- maybe nobody. Basically it confirmed what I said in my first post.

Why he then felt the need to dump on me for saying in a few lines what he'd said in 43 pages, I'll never know, nor do I particularly care at this point.

We now return to regularly scheduled programming.
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Old 08-07-2011, 09:09 PM   #1745
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Re: Canadian Online Poker Tax Thread

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I'm not hiding behind an alias here, I'm posting under my real name. I don't live in "Free Hugs!!!!", and if you don't know how to determine, in less than 30 seconds, that I'm a lawyer, then, my friend, you may have an LLB, but you aren't a lawyer.
It isn't a secret that I don't work -- law doesn't pay enough and working is so annoying. Everything about your post would strongly imply that you are not a lawyer but I would accept the possibility that you might be a bad lawyer who works for some low-tier firm.
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Old 08-07-2011, 09:29 PM   #1746
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Re: Canadian Online Poker Tax Thread

My own view is that the line-drawing exercise between casual and professional players is so difficult that professional advice is indispensable. Any post that suggests a "black and white" answer promotes public misunderstanding of the law and deserves to be swiftly and decisively responded to.
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Old 08-08-2011, 04:26 AM   #1747
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Re: Canadian Online Poker Tax Thread

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You must be joking. I said exactly what my background was: I took tax law in law school in 1993, I claimed no "expertise" beyond that.

I'm not hiding behind an alias here, I'm posting under my real name. I don't live in "Free Hugs!!!!", and if you don't know how to determine, in less than 30 seconds, that I'm a lawyer, then, my friend, you may have an LLB, but you aren't a lawyer.

I don't know what possessed me to get involved in posting in this thread. On the brighter side, it got the ******* professor to post the article he wrote which, as far as I can tell, affirms nothing more than a speculative basis for possible liability for an extremely small number of people in Canada -- maybe nobody. Basically it confirmed what I said in my first post.

Why he then felt the need to dump on me for saying in a few lines what he'd said in 43 pages, I'll never know, nor do I particularly care at this point.

We now return to regularly scheduled programming.
You're really not getting it. Every point you've made has already been brought up ad nauseum and discussed extensively. I'm not even saying whether I agree with any of your points or not. I was simply trying to bring to your attention that you're not adding anything new to this thread. You didn't "get the ***** professor" to post anything. That article was posted and discussed already awhile ago.

Did you really think that what you posted so far in this nearly 7 year old, 18 page discussion is novel in any way? Seriously? I was being kind when I said you were coming across a little foolish/naive. I have to admit I find some of the regulars in this thread amusing in their persistence. I've been subscribed to this discussion for nearly two years now. People like you come along at regular intervals, bringing up the same old tired points and the same old regulars come on and repeat their same arguments over and over. Easily 2/3 of this thread is filled with this clutter thanks to all the ignoramuses who decide what they think/know is interesting or relevant to the followers of this discussion before they even take a little bit of time to get even a vague idea of where the discussion is at.

There have been cases where poker players have been audited by the CRA and forced to pay taxes on their winnings. Obviously these guys got professional help. None of this has shown up in court because nobody wants to risk it. So there is very little precedent set. If you take the CRA to court they go for all the full penalties and interest on top of back taxes if you lose. If you settle out of court you simply pay the tax you owe and don't get buried. There is a detailed post in this thread discussing this.
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Old 08-20-2011, 08:35 PM   #1748
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Re: Canadian Online Poker Tax Thread

Not sure if this sort if question has come up, but would it make any difference for 'rakeback pros' who show no profit or even losses in poker activities, but solely make their income from fpps?

Like for example a Supernova Elite on stars can be losing 30k a yr on the tables but in reality is making 70k~ from the reward program. Would that be considered at all in the 'business of poker' when at first glace you're actually breaking even or losing on the tables. And also should the points be viewed as more of a gift/compensation/reward from the site as opposed to your actual poker earning or winnings?
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Old 08-21-2011, 06:44 AM   #1749
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Re: Canadian Online Poker Tax Thread

Of course a rakeback pro is going to be taxable -- more so than a winning player.
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Old 08-28-2011, 09:32 PM   #1750
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Re: Canadian Online Poker Tax Thread

Hey,

I could use some help guys. I need a tax accountant that will deal with poker players in Vancouver. I want a really good one and don't mind paying a decent rate. Any recommendations would be appreciated!

Thanks!
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