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Old 11-18-2011, 05:34 PM   #1801
easternhelium
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Re: Canadian Online Poker Tax Thread

lol I'm going to need a lawyer to interpret the above link, that's what
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Old 11-18-2011, 07:20 PM   #1802
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Re: Canadian Online Poker Tax Thread

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Originally Posted by TaxGuru View Post
In Canadian law you have to be fiscally resident somewhere. See Churchill v. Canada (TCC, 1991):

"Mr. Justice Mahoney touches the point when he says in the case Reeder vs The Queen at page 5163 D.T.C. (4.02(1)) that:
The matter of ties within the jurisdiction asserting residence and elsewhere runs the gamut of an individual's connections and commitments: property and investment, employment, family, business, cultural and social are examples, again not purporting to be exhaustive. Not all factors will necessarily be material to every case. They must be considered in the light of the basic premises that everyone must have a fiscal residence somewhere and that it is quite possible for an individual to be simultaneously resident in more than one place for tax purposes."
Does that mean in places where you need to spend X days to be considered a fiscal resident, that it isnt actually a requirement, but just one of the things they look at? So if you don't spend the required amount of time anywhere, it just goes on down the list of things like property, employment, family, etc? Does that mean that if you are only a resident in one place, that regardless of how much time you spend there you will be considered a fiscal resident?

Thanks for putting up with the potentially dumb questions
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Old 11-19-2011, 08:17 AM   #1803
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Re: Canadian Online Poker Tax Thread

The answer is that it really depends. Because of the Canadian view that you have to be fiscally resident somewhere, and possibly in multiple places, you cannot easily lose your Canadian fiscal residence. You need to show that your residential ties are stronger somewhere else and that you have no plans to return to Canada I the next several years. But you also need to look at the tax treaty between Canada and the place you want to establish fiscal residence in, since you might fall into the trap of being found to be resident in both countries if there is no residency tie breaking provision. This could result in some double taxation (though not necessarily, because of foreign tax credit rules, etc).

One thing is clear. The stakes are high in this for governments and taxpayers alike, and it has been the subject of decades of legal development and counter-development. You should be wary of thinking that you can come up with some kind of strategy that hasn't been tried before and is successful. The most effective ways of avoiding fiscal residence are clear (severing all ties, filing a departing tax return, tec) and quite inconvenient if you want to keep more than a transitory active life in Canada.
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Old 11-19-2011, 03:47 PM   #1804
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Re: Canadian Online Poker Tax Thread

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Originally Posted by TaxGuru View Post
The answer is that it really depends. Because of the Canadian view that you have to be fiscally resident somewhere, and possibly in multiple places, you cannot easily lose your Canadian fiscal residence. You need to show that your residential ties are stronger somewhere else and that you have no plans to return to Canada I the next several years. But you also need to look at the tax treaty between Canada and the place you want to establish fiscal residence in, since you might fall into the trap of being found to be resident in both countries if there is no residency tie breaking provision. This could result in some double taxation (though not necessarily, because of foreign tax credit rules, etc).

One thing is clear. The stakes are high in this for governments and taxpayers alike, and it has been the subject of decades of legal development and counter-development. You should be wary of thinking that you can come up with some kind of strategy that hasn't been tried before and is successful. The most effective ways of avoiding fiscal residence are clear (severing all ties, filing a departing tax return, tec) and quite inconvenient if you want to keep more than a transitory active life in Canada.
Just one last question - what exactly do you mean by no plans to return to Canada in the next few years? Do you mean you can't even really visit(ie : 2-3 two week trips)? I was under the impression that visits are okay?
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Old 11-19-2011, 06:26 PM   #1805
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Re: Canadian Online Poker Tax Thread

Yes, you can visit to Canada.
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Old 12-01-2011, 11:35 PM   #1806
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Re: Canadian Online Poker Tax Thread

So say a Canadian poker player has been playing poker as his main source of income for a few years now and comfortably makes six figures a year but has decided that it's in his best interest not to file the winnings as income (for whatever justifications he so chooses). I'm pretty certain that a lot of players fit this criteria pretty closely and would likely be interested in hearing some discussion on the following questions and issues:

1) What types of things can cause the CRA to take notice and decide to investiage/audit you? If this player's income from employment is $0 annually yet he has sizable investments that produce capital gains that he files, does this qualify as a discrepancy and cause suspicion? Once engaged in an audit, its obvious that owning expensive real estate and driving a nice car and having fancy things works against this player as he becomes pretty defenseless when trying to provide his means for these things... but do having these things somehow put this player in a greater risk category for the CRA taking notice and ordering an audit? ie. if this person has nothing suspicious on their filed taxes and are not attracting attention in that regard, is it conceivable that the CRA could still be "tipped off" through some other means of detecting the fact that his lifestyle doesn't match up with his reported tax income?


2) Once engaged in an audit, what exactly does the process entail? ie. how long does it take, necessary actions, lawyers involved, court, etc..? What would likely be the worst case scenario? How deep does the CRA's investigations go? (ie. would they go as far as to research online data-mining sites to seek results? track online message-board activity regarding strategy development, etc?) How incriminating would immediately taking a baseball bat to one's hard-drive be upon receiving a call from the CRA requesting an investigation?
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Old 12-02-2011, 12:01 AM   #1807
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Re: Canadian Online Poker Tax Thread

All your questions have been discussed in this thread.

Top ways of getting audited is filing investment income incorrectly and bringing attention to yourself in that way or getting ratted on by friends/family/neighbors. If you shoot your mouth off about how you don't have to pay tax, maybe end up with some haters. Understandable, since most people work 3-6 months every year just to pay off tax.

Why would you want to smash your hard drive? The CRA will estimate your income based on your assets and they always estimate on the very high end. The onus is then on you to prove you DIDN'T make that much. I've never heard of CRA audit claiming less than people actually made. So poker players should keep extremely detailed records. Would you rather be a criminal that can't explain assets. Or an ignorant poker player that's unclear on the tax law (like most of us still are)?
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Old 12-02-2011, 12:18 AM   #1808
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Re: Canadian Online Poker Tax Thread

Another question.. is the poker player described generally pretty "safe" from any CRA investigations after they've received their return in any given year? ie. if the player is scared of something on their tax filing looking weird/suspicious, but they get their assessment back as per normal, the "sweat" is over for the given year?
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Old 12-02-2011, 02:24 PM   #1809
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Re: Canadian Online Poker Tax Thread

In Canada you are required to retain your tax records for six years. If they start to get suspicious, they can definitely ask for any of the last six years of records from you. So, no, it's not just the four months after you file and get your form back from the government. Having said that, I've yet to have a request for information more than eight months after the date that I've filed the form electronically (and it is usually for "prove moving expenses" or "prove medical expenses" and the like). I've never been asked about anything that I've had a government form generated for. :-)

I believe that taking a baseball bat to your hard drive would qualify as a problem, as described under RC4409:

"If you destroy paper or electronic records without the express permission of the CRA, you may be subject to prosecution."
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Old 12-03-2011, 04:02 AM   #1810
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Re: Canadian Online Poker Tax Thread

I think you are really misunderstanding the common sense here. The CRA doesn't really have the means to figure out your online screennames, nor does it for forums. They are not detectives, they are not going to come to your house and take the hard drive from your computer. They are going to assess how much you made from the amount of money you have coming into your bank and the assets you have. If you feel it is unfair then it is up to you to bring in the data. I have no clue why you would even have a thought of needing to hide your harddrive, its not like this is a murder investigation, the worst they will do is overevalute what you owe/.

Quote:
Originally Posted by CapnRunGood View Post
So say a Canadian poker player has been playing poker as his main source of income for a few years now and comfortably makes six figures a year but has decided that it's in his best interest not to file the winnings as income (for whatever justifications he so chooses). I'm pretty certain that a lot of players fit this criteria pretty closely and would likely be interested in hearing some discussion on the following questions and issues:

1) What types of things can cause the CRA to take notice and decide to investiage/audit you? If this player's income from employment is $0 annually yet he has sizable investments that produce capital gains that he files, does this qualify as a discrepancy and cause suspicion? Once engaged in an audit, its obvious that owning expensive real estate and driving a nice car and having fancy things works against this player as he becomes pretty defenseless when trying to provide his means for these things... but do having these things somehow put this player in a greater risk category for the CRA taking notice and ordering an audit? ie. if this person has nothing suspicious on their filed taxes and are not attracting attention in that regard, is it conceivable that the CRA could still be "tipped off" through some other means of detecting the fact that his lifestyle doesn't match up with his reported tax income?


2) Once engaged in an audit, what exactly does the process entail? ie. how long does it take, necessary actions, lawyers involved, court, etc..? What would likely be the worst case scenario? How deep does the CRA's investigations go? (ie. would they go as far as to research online data-mining sites to seek results? track online message-board activity regarding strategy development, etc?) How incriminating would immediately taking a baseball bat to one's hard-drive be upon receiving a call from the CRA requesting an investigation?
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Old 12-03-2011, 04:13 AM   #1811
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Re: Canadian Online Poker Tax Thread

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the worst they will do is overevalute what you owe/.
Which would suck, since you just smashed your hard drive and destroyed all the evidence that you earned less.....LOL.
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Old 12-03-2011, 10:33 AM   #1812
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Re: Canadian Online Poker Tax Thread

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In Canada you are required to retain your tax records for six years. If they start to get suspicious, they can definitely ask for any of the last six years of records from you.
There are a few ways they could go back even further than six years but it is too early in the morning for me to remember how that happens and given most people in this topic are mid-20s not really worth looking up.

I have been asked to supply additional documentation for the last few years -- typically in October or November.
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Old 12-03-2011, 10:18 PM   #1813
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Re: Canadian Online Poker Tax Thread

The smartest thing I would think for a Canadian Professional Poker players to do would be to go onto welfare, then cashout via to your online wallet and withdrawl at a local atm with your debit card. leaving no paper trail behind.

Would this work? If say x player makes 100k a year over the last 4 years playing online poker but has no paper trail to proove this?

I mean your still paying taxes on your welfare right? just keep hush hush about your poker bankroll.

Great Thread Pete!
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Old 12-03-2011, 11:07 PM   #1814
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Re: Canadian Online Poker Tax Thread

Your debit card statement is a papertrail..
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Old 12-03-2011, 11:10 PM   #1815
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Re: Canadian Online Poker Tax Thread

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Originally Posted by TakeYourEmpire View Post
The smartest thing I would think for a Canadian Professional Poker players to do would be to go onto welfare, then cashout via to your online wallet and withdrawl at a local atm with your debit card. leaving no paper trail behind.

Would this work? If say x player makes 100k a year over the last 4 years playing online poker but has no paper trail to proove this?

I mean your still paying taxes on your welfare right? just keep hush hush about your poker bankroll.

Great Thread Pete!
That's genius. I mean who would want to make huge profits on property and other investments. I mean properly investing a 100k+/year is worth way more in the long run than any taxes you would pay.
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Old 12-04-2011, 09:31 AM   #1816
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Re: Canadian Online Poker Tax Thread

Most people don't want to live in the ghetto (although given what I have seen of poker houses maybe I'm wrong) and even the idiots at social assistance will realize something is up when your housing costs are atypical.
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Old 12-04-2011, 08:08 PM   #1817
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Re: Canadian Online Poker Tax Thread

What I don't understand (and the reason for my half-joking hard-drive comment) is what exactly would occur if the player described was audited.

Okay so they were filing $0 income for a few years while making six figures playing poker. For whatever reason (possible reasons already discussed), CRA becomes suspect and decides to audit:

I assume what happens next is they look into his assets.. and when they see he owns an expensive property and drives a fancy car and had a lot of money streaming in/out of his bank accounts, they say "where did this money come from?" The answer is "gambling winnings, I got lucky, won some tournaments, etc.." So if the CRA puts the responsibility on the person getting audited to prove how they accumulated their assets and the answer is through a potentially non-taxable means, is it possible they accept this answer? (ie. they say "okay we think you made $200k/yr, you have to pay us.." and you say "well i did.. but it was through a windfall/[insert other argument here]".)

And if they don't accept this answer, will the audited person have any opportunity to "prove" their "hobby" and show it wasn't a profession? (ie. lawyers are involved, becomes a public case, maybe sets a precedent for the rest of us, and something that hasn't happened yet but likely will soon?)

Or will the CRA basically just say "we think you owe us taxes on $200k/yr because you have these fancy things, we don't accept your argument that the money was a windfall, and you have to pay us the money unless you have another way of actually showing you made less through this profession of poker."?
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Old 12-04-2011, 08:27 PM   #1818
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Re: Canadian Online Poker Tax Thread

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What I don't understand (and the reason for my half-joking hard-drive comment) is what exactly would occur if the player described was audited.

Okay so they were filing $0 income for a few years while making six figures playing poker. For whatever reason (possible reasons already discussed), CRA becomes suspect and decides to audit:

I assume what happens next is they look into his assets.. and when they see he owns an expensive property and drives a fancy car and had a lot of money streaming in/out of his bank accounts, they say "where did this money come from?" The answer is "gambling winnings, I got lucky, won some tournaments, etc.." So if the CRA puts the responsibility on the person getting audited to prove how they accumulated their assets and the answer is through a potentially non-taxable means, is it possible they accept this answer? (ie. they say "okay we think you made $200k/yr, you have to pay us.." and you say "well i did.. but it was through a windfall/[insert other argument here]".)

And if they don't accept this answer, will the audited person have any opportunity to "prove" their "hobby" and show it wasn't a profession? (ie. lawyers are involved, becomes a public case, maybe sets a precedent for the rest of us, and something that hasn't happened yet but likely will soon?)

Or will the CRA basically just say "we think you owe us taxes on $200k/yr because you have these fancy things, we don't accept your argument that the money was a windfall, and you have to pay us the money unless you have another way of actually showing you made less through this profession of poker."?
I would recommend reading this thread. It's worth your time. From what I understood from following this thread, they sort of extort you. If you want to fight it in court and lose they go for interest, penalties, and back tax. If you settle you can prob just pay the back tax.
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Old 12-04-2011, 08:59 PM   #1819
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Re: Canadian Online Poker Tax Thread

You can fight it in court but litigation is expensive and odds are you'd be better off trying to cut a deal on reduced interest and penalties than to try to fight it.
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Old 12-04-2011, 09:11 PM   #1820
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Re: Canadian Online Poker Tax Thread

I have read the thread a few times over the past few years.. guess I'm about due for another day-long read though so sorry for bringing up old topics.

I don't recall ever reading about exactly where the whole "professional v. hobbyist" argument ever comes into play within an audit.

So if someone who's won the lottery gets audited, the reasons for no income become obvious and I'd assume the CRA goes away without penalty/court etc.. Yet if the person I described above gets audited, with such a huge gray area pertaining to gambling winnings and professionalism definitions, I don't understand how the CRA can just snap-assume they're a pro and they have to pay. What if someone who's legitimately a 100% hobbyist (with no truth-twisting) who's won a tournament or two gets audited? They're just as ****ed?
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Old 12-04-2011, 09:13 PM   #1821
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Re: Canadian Online Poker Tax Thread

Because despite what people keep saying it is not a grey area.
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Old 12-04-2011, 09:23 PM   #1822
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Re: Canadian Online Poker Tax Thread

That's my point though.. then there has to be some form of investigation to find out whether the person being audited was actually a pro v. just a random person who won some money playing poker, no?

Once explained that you "won some money playing poker, a couple big tournament wins, did some real estate stuff, etcetc.." for explaining your assets and money streams, how do they still decide you were a professional poker player?
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Old 12-04-2011, 09:28 PM   #1823
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Re: Canadian Online Poker Tax Thread

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Originally Posted by CapnRunGood View Post
I have read the thread a few times over the past few years.. guess I'm about due for another day-long read though so sorry for bringing up old topics.

I don't recall ever reading about exactly where the whole "professional v. hobbyist" argument ever comes into play within an audit.

So if someone who's won the lottery gets audited, the reasons for no income become obvious and I'd assume the CRA goes away without penalty/court etc.. Yet if the person I described above gets audited, with such a huge gray area pertaining to gambling winnings and professionalism definitions, I don't understand how the CRA can just snap-assume they're a pro and they have to pay. What if someone who's legitimately a 100% hobbyist (with no truth-twisting) who's won a tournament or two gets audited? They're just as ****ed?
It's not really fair. If you look at more recent posts in this thread (past month or so) you'll see a recent case where a guy tried the opposite. He quit his job as a lawyer and went full time poker, but lost over 150k for the year. He went to court arguing he has a reasonable expectation of profit and lost his case to get a tax write off for his losses. Obviously a double standard.
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Old 12-04-2011, 09:40 PM   #1824
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Re: Canadian Online Poker Tax Thread

Also.. I do plan on reading through the thread in the coming days, but has the issue of not paying from a morality standpoint (disregarding "ev" etc..) been discussed much? (iirc it hasn't from the last time I read through the thread..)

It's something I've been thinking a lot about in the past week and am curious to hear some opinions. Probably a big enough issue that it deserves its own thread.. maybe I'll consider starting one.

Personally, I don't think its as clear-cut as "well you're breaking the law being a poker pro in Canada that succeeds and nets profit but doesn't pay taxes, so what you're doing is wrong from a morality standpoint." On the other hand, I don't think I feel comfortable saying that the person is not doing anything wrong and should feel fine about it. I'm fairly torn about it and hence why I'm interested to hear some thoughts. Let me know if you think I should start a new thread regarding the topic.
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Old 12-04-2011, 09:44 PM   #1825
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Re: Canadian Online Poker Tax Thread

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That's my point though.. then there has to be some form of investigation to find out whether the person being audited was actually a pro v. just a random person who won some money playing poker, no?
No. In fact they don't even need to establish that you play poker at all. All that matters is that you have stuff / money / lifestyle that your income can't explain. CRA doesn't care if you play poker or sell crack.
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