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Old 01-19-2012, 08:33 PM   #1951
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Re: Canadian Online Poker Tax Thread

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Originally Posted by LazyAce View Post
I
My question is, could he write off his prior losses as a business expense? It would make sense that was the cost of learning to become a winning player.
No. Previous losses are not a write off.

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Originally Posted by ryanmack View Post
why is rakeback taxable its its you giving them money and them giving you less back i dont think that is income
Aeroplan points are just Air Canada giving back money you have them and it is still taxable.
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Old 01-19-2012, 09:43 PM   #1952
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Re: Canadian Online Poker Tax Thread

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No. Previous losses are not a write off.



Aeroplan points are just Air Canada giving back money you have them and it is still taxable.
Didn't know that. Are all points systems taxable? Like Shoppers Optimum?
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Old 01-19-2012, 09:48 PM   #1953
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Re: Canadian Online Poker Tax Thread

If somehow you acquire significant Optimum points while your employer is paying for the purchases then yes. I really can't imagine a scenario where that is possible but if it was then they would be taxable.
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Old 01-19-2012, 10:18 PM   #1954
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Re: Canadian Online Poker Tax Thread

(1) rake is a business expense. Your true win rate includes the money you pay for rake (even though trackers automatically deduct the rake). If you get rakeback it's simply reduced business expense from the same win rate.

(2) Henry I follow you on no deductions for initial losing years since it's hard to establish you had REOP in the beginning. But if you have a losing year in between winning years that you have paid taxes on that should be deductible correct?

(3) getthatmoney I find it hard to believe you make 100k/year and have 200k in the bank (chequing account not checking eh?) but still haven't bothered to even read this thread for yourself or even considered the most basic fundamental principles of investing or tax law. Even paying a professional to invest for you in the form of a relatively low risk mutual fund would be literally exponentially better than letting money rot in a chequing account for years, even if you paid the tax on the income source up front. IMO the type of person that makes 6 figures in poker is also the type of person that has the work ethic and diligence to at least do some initial research of their own on basics before posting naive questions on a public forum.

No offense, just it gets old fast if you subscribe to this thread. I respect Henry17's patience but it's amazing how he spoon feeds and coddles the dozens of posters like you on a regular basis. If the average person just read before posting, forums could be some real enlightened places.
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Old 01-19-2012, 11:27 PM   #1955
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Re: Canadian Online Poker Tax Thread

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Even paying a professional to invest for you in the form of a relatively low risk mutual fund would be literally exponentially better than letting money rot in a chequing account for years, even if you paid the tax on the income source up front.
You are suggesting that paying taxes on my winnings + investing low risk is exponentially better than not paying taxes on my winnings + not investing at all?

Can you show some math? I'm sure you are right, but it would help if you can further explain.

If you are talking about just investing and paying that tax vs not investing at all, then yes, obviously. My concern is that by filing, I (slightly?) increase the chance of ending up having to pay back taxes on my winnings. So unless the return on investment is pretty high, I dont think its worth taking that risk. Is this a bad way of looking at it?

FWIW, I have read this entire thread.
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Old 01-19-2012, 11:35 PM   #1956
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Re: Canadian Online Poker Tax Thread

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If somehow you acquire significant Optimum points while your employer is paying for the purchases then yes. I really can't imagine a scenario where that is possible but if it was then they would be taxable.
I have a friend that is a regional manager for a retail chain so he does a lot of driving. He always gasses up at Petro Canada and collects the points.

Does the tax man ever go after people who do this?

As for the Shoppers points, I was more asking for myself. I don't purchase things from shoppers for work but I do tend to rack up a lot of points. I cashed over $2k in 2011. Is that taxable? Sorry for this dumb question but I really do enjoy being coddled.
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Old 01-19-2012, 11:51 PM   #1957
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Re: Canadian Online Poker Tax Thread

Points you collect from personal use are not taxable. It has to be points acquired though employment.
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Old 01-19-2012, 11:51 PM   #1958
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Re: Canadian Online Poker Tax Thread

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You are suggesting that paying taxes on my winnings + investing low risk is exponentially better than not paying taxes on my winnings + not investing at all?

Can you show some math? I'm sure you are right, but it would help if you can further explain.

If you are talking about just investing and paying that tax vs not investing at all, then yes, obviously. My concern is that by filing, I (slightly?) increase the chance of ending up having to pay back taxes on my winnings. So unless the return on investment is pretty high, I dont think its worth taking that risk. Is this a bad way of looking at it?

FWIW, I have read this entire thread.
Fine, since you have a good attitude in spite of me busting balls, here's some spoon feeding for ya. As you can see your investing will yield exponentially increasing returns.

http://math.about.com/od/formulas/a/compound.htm

As far as specific interest rates, just shop around and ask a number of professionals for opinions.
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Old 01-19-2012, 11:58 PM   #1959
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Re: Canadian Online Poker Tax Thread

LOL. I know what compounding interest is.

Do you have any opinion on my second point?
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Old 01-20-2012, 12:06 AM   #1960
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Re: Canadian Online Poker Tax Thread

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LOL. I know what compounding interest is.

Do you have any opinion on my second point?
Your second point has been discussed ad nauseam in this very thread. The exact amount of tax you would have to pay vs. the return you could get over x years is a simple thing to work out, but the exact numbers depend on your investment portfolio. The question is though can you have your cake and eat it too. I.E. invest in real estate, or mutual funds ect AND not pay taxes on your initial source of money from poker. You then have to weight risk vs. reward in terms of how steep you expect penalties to be if you're caught vs how much tax you pay and how much extra interest you could have earned on the amount you lost in tax payment. As I said there has been extensive discussion on this specific topic in this thread. It's why I assumed you hadn't read the entire thread.
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Old 01-20-2012, 12:10 AM   #1961
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Re: Canadian Online Poker Tax Thread

Ok, so 200k at 5% over 10yrs will make 125k. I will clearly pay much more than that in poker taxes. Did I do something wrong? I have no idea if 5% is too high or too low. This is why I asked for further explanation/math.

If I dont pay taxes on poker, then the question becomes is it worth taking the added risk of having to pay back taxes to make 125k. I dont know. I guess I should re-read the thread.



Edit: Ok, maybe you are talking about only pay taxes on that 200k, and not on any future winnings. So in that case it would make sense. But if I would have to pay taxes on future winnings it doesnt.

Edit#2: Is that possible though? Like if you pay poker taxes 1 year, how can you claim its untaxable the next year?

Last edited by getthatmoney; 01-20-2012 at 12:23 AM.
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Old 01-20-2012, 12:21 AM   #1962
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Re: Canadian Online Poker Tax Thread

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Ok, so 200k at 5% over 10yrs will make 125k. I will clearly pay much more than that in poker taxes. Did I do something wrong? I have no idea if 5% is too high or too low. This is why I asked for further explanation/math.

If I dont pay taxes on poker, then the question becomes is it worth taking the added risk of having to pay back taxes to make 125k. I dont know. I guess I should re-read the thread.
You can do a lot better than 5%. Just spend some time doing some research on this and asking professionals for their opinions. I'm by no means in a position to offer investment advice. Even if you did go ultra safe/conservative with your investments and earn only 5%, you will pay nowhere near 125k in tax on 200k earnings even if you earned the entire 200k in a single year. Of course you will have to factor in additional tax on your actual investment earnings.
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Old 01-20-2012, 12:26 AM   #1963
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Re: Canadian Online Poker Tax Thread

Also you're implying that not investing and keeping money in a chequing account, somehow precludes getting audited and having to pay penalties and back taxes. It could affect your chances of getting audited, but the two are in no way mutually exclusive. But again this has been discussed quite a bit in the thread already, so I'm not going to go into detail. If you're a poker pro making 6 figures a year, put in some serious study time on this stuff IMO.
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Old 01-20-2012, 12:30 AM   #1964
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Re: Canadian Online Poker Tax Thread

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Originally Posted by getthatmoney View Post


Edit: Ok, maybe you are talking about only pay taxes on that 200k, and not on any future winnings. So in that case it would make sense. But if I would have to pay taxes on future winnings it doesnt.

Edit#2: Is that possible though? Like if you pay poker taxes 1 year, how can you claim its untaxable the next year?
You obviously pay tax each year on additional poker winnings if you went that route. But the compounding interest formula only depends on your initial investment, which is taxed only once. Additional earnings creates new principle obviously. Are you trolling me?
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Old 01-20-2012, 12:32 AM   #1965
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Re: Canadian Online Poker Tax Thread

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Ok, so 200k at 5% over 10yrs will make 125k. I will clearly pay much more than that in poker taxes. Did I do something wrong?
What do you think people pay in taxes?

Someone making $100k will pay about $27k in taxes.

Quote:
I have no idea if 5% is too high or too low. This is why I asked for further explanation/math.
I'd say low.
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Old 01-20-2012, 12:35 AM   #1966
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Re: Canadian Online Poker Tax Thread

"Additional earnings creates new principle obviously. Are you trolling me? "


I am in no way trolling.

For example if I am paying tax every year then after my expenses there may not be very much new principle.



@Henry. Over 10years I will pay more than 125k in taxes.
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Old 01-20-2012, 12:38 AM   #1967
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Re: Canadian Online Poker Tax Thread

So if I bump it up to 8% and add 10k per year this gives 580k. Assuming 100k/yr + 200k initial, the tax will be like 30% of 1.2M or 360k. Ok.

Edit: I am stupid. I forget to subtract the 200k from 580k. It only gains 380k.
You would have to add in more than 10k each year then to make it worth it.

Last edited by getthatmoney; 01-20-2012 at 12:50 AM.
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Old 01-20-2012, 07:58 AM   #1968
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Re: Canadian Online Poker Tax Thread

Don't forget that most people can save a significant proportion in TFSA and RRSPs, which are tax advantaged. You can't do that if you don't file.
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Old 01-20-2012, 05:04 PM   #1969
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Re: Canadian Online Poker Tax Thread

[QUOTE=LazyAce;31045395]I have a friend that is a regional manager for a retail chain so he does a lot of driving. He always gasses up at Petro Canada and collects the points.

Does the tax man ever go after people who do this?
QUOTE]

Yes they do, but not very often since it takes a lot of points to make up enough $ for it to be worthwhile for them
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Old 01-20-2012, 05:32 PM   #1970
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Re: Canadian Online Poker Tax Thread

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By the way Toronto, I'm interested to know more about the audits you recently handled involving poker players. If you are able to share,please do so.
I can't say much but the people came to the CRA's attention because of other activities, all legit and well documented. They were selected for audit due to the size of certain types of income and deductions. Poker was less than 10% of their income though it would be a significant amount for the average person to make at a job.

The CRA was extremely accommodating and friendly at first and it was the gentle audits ever. Then when they didn't find anything, they started looking at poker income, probably to justify their audit costs. In one case they have arranged to bring in a forensic computer expert to watch the person download their playing logs for a 2 year period to ensure that the download they get is complete and accurate.

I will be there next week when this happens but my opinion on the CRA is now evolving.
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Old 01-20-2012, 05:38 PM   #1971
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Re: Canadian Online Poker Tax Thread

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Originally Posted by getthatmoney View Post
Ok, so 200k at 5% over 10yrs will make 125k. I will clearly pay much more than that in poker taxes. Did I do something wrong? I have no idea if 5% is too high or too low. This is why I asked for further explanation/math.

If I dont pay taxes on poker, then the question becomes is it worth taking the added risk of having to pay back taxes to make 125k. I dont know. I guess I should re-read the thread.



Edit: Ok, maybe you are talking about only pay taxes on that 200k, and not on any future winnings. So in that case it would make sense. But if I would have to pay taxes on future winnings it doesnt.

Edit#2: Is that possible though? Like if you pay poker taxes 1 year, how can you claim its untaxable the next year?
Don't overlook the potential value of writing off losses in losing years if you have a track record of declaring winnings.
This changes the equation somewhat if you may ever have a losing year.

You also need to facor in social benefits you might accrue by declaring income, like CPP, tax rebates, property tax credits and the TFSA.
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Old 01-20-2012, 05:47 PM   #1972
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Re: Canadian Online Poker Tax Thread

CPP as a benefit? As a poker player you have to pay both portions and I'm pretty sure you never get back what you contribute. I could be wrong but avoiding CPP has always been an argument for incorporating.

TFSA is a big benefit to give up-- especially for younger individuals-- and it was one of the main reasons I decided to start filing again.
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Old 01-20-2012, 08:12 PM   #1973
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Re: Canadian Online Poker Tax Thread

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Originally Posted by TorontoCFE View Post
I can't say much but the people came to the CRA's attention because of other activities, all legit and well documented. They were selected for audit due to the size of certain types of income and deductions. Poker was less than 10% of their income though it would be a significant amount for the average person to make at a job.

The CRA was extremely accommodating and friendly at first and it was the gentle audits ever. Then when they didn't find anything, they started looking at poker income, probably to justify their audit costs. In one case they have arranged to bring in a forensic computer expert to watch the person download their playing logs for a 2 year period to ensure that the download they get is complete and accurate.

I will be there next week when this happens but my opinion on the CRA is now evolving.
Thanks for sharing Toronto.

The downloading of logs is quite interesting. Is this to see whether the wins are big tourney scores or if they are from cash game/tourney grinding? Or do they want to make sure that the reported poker income actually came from poker and not something else?

How come over a 2-year period? Had the person been claiming poker income for 2 years and they wanted to verify details of the previous year?

Thanks again.
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Old 01-21-2012, 11:18 AM   #1974
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Re: Canadian Online Poker Tax Thread

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CPP as a benefit? As a poker player you have to pay both portions and I'm pretty sure you never get back what you contribute. I could be wrong but avoiding CPP has always been an argument for incorporating.

TFSA is a big benefit to give up-- especially for younger individuals-- and it was one of the main reasons I decided to start filing again.
Contributing to cpp may not make complete economic sense but at least it can fill in earnings years to max it out and some people need the mandatory savings even if it is at a low rate
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Old 01-21-2012, 10:29 PM   #1975
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Re: Canadian Online Poker Tax Thread

is there anyone itt who helps with people filing as a professional?
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