Bump

Sorry for digging this up guys, but I have a question...If I'm in University and online poker is my sole source of income should I go ahead and declare it? I have a feeling I will anyways. How do I go about declaring it to the CRA.

Thanks.

Vin17,

As far as I understand, the only way to claim it is as self-employed income (that requires a T2124 form). I may be completely wrong about this, though. It takes some work though, and you have to worry about GST (seriously).

You can always just not claim it, since gambling winnings can be considered tax-free under most circumstances.

If you want to claim it, there are lots of things you can write-off (rent, internet, computer, etc.)

I can maybe provide more information. Contact me by PM.
If you are in the Toronto area, I may be able to get you in touch with an accountant (who is also plays some micro-stakes poker) who can provide you more info. She is trying to understand the issue better herself, so she is willing to give out free info. No worries, I ain't shilling, she'd only want remuneration if you need her to do your taxes for you.

Has anyone investigated the CCPC option (creating a corporation) commented on by TorontoCFE? What are you guys doing these days about claiming?

I'm considering quitting my job and going pro in which case I'd claim wins and deductions.

Ive had this case bookmarked for a while.

http://decision.tcc-cci.gc.ca/cgi-bin/si...g&langue=en

Its a 2002 case about a Ontario businessman whos business was audited. He was audited because although his business claimed a loss for certain years, his assets grew in those same years because of his poker winnings. Thus Revenue Canada tried to come after his poker winnings.

Question:
How do I declare poker income that is still in US funds?

uh....convert it?

I don't want to crash the whole positive vibe of the thread, but what are the ways to not have any paper trail?

If I make 300k this year is it possible for me to just declare lets say 60k and get the rest cash through neteller card?

Thanks for any help and if its already in the thread scream at me, I skimmed through it at work.

~p

The rate is constantly changing though.... Just randomly pick a day and convert it? So lets say I file my return today and convert it at a rate of 1.18. Now when I actually cash it out the rate is 1.10 or something, I loose out no?

I'm curious because I wonder if you could get away with treating money on a site like an investment that you have not yet cashed.

You use the Bank of Canada average rate for 2006 that is found on their website or the CRA site.

Sure it is possible and somewhat easy but I don't know if anyone is going to help you evade taxes or currency control regulations.

Thanks for providing this link. I read the whole thing but I had trouble understanding the "Judgement" sections. I found it possible to follow the Evidence sections, but I can't tell what the conclusion was.

Does this mean that he didn't have to pay taxes on his gambling winnings for those 5 years because they deemed that he was a lucky and casual gambler, even though he did it every day of the week? That was my interpretation of the case.

Or does this mean that he just didn't have to pay GST but he had to pay income tax on his winnings? If he didn't have to pay any taxes then it seems like it would be smart to emulate his story ("gee, I played online for fun every day and drank at home but had beginners luck for my first few years").

"[32] The Appellant has satisfied the onus which is upon him by demonstrating, on a balance of probabilities, that the increase in cash during these periods was largely attributed to non-taxable windfall gains from casual gambling, together with other non-taxable sources of money. These sources of money do not fall under section 3 of the Act and are therefore not taxable. It follows that the GST reassessment with respect to sales of taxable supplies from September 1, 1991 to August 31, 1995 will be vacated and that the taxation years 1996 through to 1998 are to be assessed for income based on the returns as filed by the Appellant. Penalties are to be deleted."

It bothers me that people who win money gambling in Canada by lucky means don't have to pay taxes whereas the people who win money gambling by skilled means have to pay taxes. If anything this should be the opposite and the contraction really bothers me. I have no problem paying taxes for my work income, but why should I have to pay taxes on something that is quasi-illegal in Canada and which is unregulated, when lottery winners can keep all their profits?

What would be wrong with this hypotethetical argument? I won $x (large amount) in an online poker tournament a few years ago when I was just starting out and won it due to beginners luck (windfall which is not taxable). This site has since closed down and there are no records of my win (which happens all the time in this sheisty industry). Since then I have kept most of the money online at various poker sites, winning some and losing some, roughly breaking even for my passtime. However I have been withdrawing money steadily from my accounts as I need it.

The main problem that I see is if the CRA forces Neteller and the poker sites to report someone's results. Do they have that power over companies which aren't legal and regulated in Canada? I realize that some of these sites are headquartered in Canadian Native reserves but they aren't truly Canadian companies I don't think.

Well it's really just a thought experiment by me. But again it bothers me that the person described above would not have to pay taxes while a person who won an equivalent amount of money steadily in cash games would (presumably) have to pay taxes, although even that isn't specified clearly enough in the tax code for my liking.

Predog: Totally agree. I wish Canada would make a decision one way or the other. I told my accountant my situation and he just told me I didn't have to pay, but I obviously do by the points made in this treat =/

The hardest part for me is deciding how far back I want to report, at what point do you distinguish recreational play to professional play.

Windfalls aren't taxable because of one reason - the income tax act must specifically list out a source of income for it to be taxable. Windfalls aren't mentioned so they aren't taxable.

The logic the tax code uses is that money you get that you do nothing to earn - such as winning the lottery, inheriting money, finding it on the street - isn't taxable because the definition of "income" requires you to do something to earn it.
The same definition would mean that capital gains (which aren't considered income) is not taxable as well, except that capital gains are specifically mentioned in the tax act so they become taxable despite not being income.

The theory in taxing income is that you are contributing to the government that created the environmnet that allowed you to make the money through the legal, economic and cultural environ society created. Money that you get without any requirement for society's rules and structures isn't taxable because society's rules weren't necessary for you to get the money.

Great points as usual TorontoCFE. Unfortunately I feel like we're contributing taxes to a government that will be taking online poker away from us at some point in the near future just as the US government did. Canada has already tried to ban advertising for online gambling sites.

It's just a sad irony that we're expected to contribute from our online poker winnings to a government that is against the pursuit. Hopefully we all don't get our money locked up on poker sites or in Neteller like the US players had happen to them.

I used to think there was no way they would change how online poker was handled.

Now I think it is something like 10% they legalize/regulate it, 40% they keep things the way they are and 50% they total ban it.

There was some article in the paper today here that the goverment would be cracking down. (provincal alberta) They went as far to say gambling online is illegal and that indians are planning on opening online province casinos. (At least this is what i made of it? It wasn't the best worded article)

Here's the link

news article

The Edmonton Sun reported yesterday that the Alberta government was conducting research and polls into whether they should set up their own internet casino, with an 800 person phone poll. Considering that the government already pulls in $1.4 billion from gambling revenue, critics are assailing this plan and the Alberta government's reliance on gambling revenue.

Today's article from the Journal that big_e linked implies that the Indian tribe wanted to run a data center (equivalent to the one in Kahnawake). The Alberta government wants to stop the enterprise before it starts. They claim that "it is illegal" based on the Criminal Code example of operating a common betting house without a licence from the provincial regulating authority (AGLC). Quebec has long stated that the Kahnawake one is illegal, but they have never been charged with anything. PatInTheHat, no one has asserted that playing in an online casino (not situated in your province of residence) is illegal, just that operating a "common betting house" is.

Eventually, we will get a much clearer ruling on "reasonable expectation of profit" for online poker and/or online casinos. In the meantime, I'm following the advice from my accountant regarding when I will have to pay. My overall tax liability is relatively small.

My personal advice (neither a legal opinion, nor should be construed as anything other than a friendly piece of advice): If you're not going to pay your taxes on your gambling income until someone asks for it, at least have enough sense to keep the marginal tax rate on your gambling income in a segregated account so that when they ask for it, you have it available to you and you won't have to go into debt when they want their cash. If you can't do that or you worry about when they're coming for you, claim it, pay the taxes on the income and sleep well at night!

I have a question. I am considering getting my wife involved in bonus whoring. Let's say, oh, maybe I play for her a little bit....you know, when she's busy. Is there any way I'm going to be able to declare this on my taxes? It would have to be her Neteller account, although I'm sure we could use a joint bank account to deposit the money into. Unfortunately, I don't see any way to prove to CCRA that I played. Since it would be advantageous to us to have it come under my taxes, I'm concerned CCRA would see this as a tax dodge, even though in this case it wouldn't be...I'd have earned the money. Any ideas?

isn't bonuswhoring playing regular casino games. If so than why is it taxable?

I was actually referring to poker mostly, but casino would come into it.

Actually, that raises an interesting question. I assumed that if you met the threshold for having to pay taxes on your poker winnings, you would also do so for casino winnings. Does the fact that it is truly a -EV game of chance change things? I wouldn't have thought so myself, but it never hurts to check.

I would suggest that money you make on a bonus isn't techincally gambling income.

if you're playing -ev games it can be difficult to have 'reaasonable expectation of profit'.

Perhaps, I'm no expert.

Leaving that aside then, let's assume I'm speaking only in terms of poker bonuses/profits. If a person, for whatever reason, were to have earned money through their own play, but it appeared for all intents and purposes to have been earned by someone else, is there any way for the person who REALLY earned it to claim on their taxes and NOT be entirely screwed in the case of an audit?