I know it's a long thread, but if you're really interested in the topic, you probably should read through at least some of it.

good thread. i have read a lot.

i started playing poker as a hobby. I work full time. I play at night and i spend may be 2/3 hours per day playing online poker and i win 100-500 dollars per day on average. I cash out to my bank account on a daily basis.

is it taxable? is it better i cash out monthly rather than daily?

Nope, you are 100% in the clear. I can personally guarantee it. paying taxes on that would just be wasting $$$. There's literally no way 10 CRA would come after you and 2) is they did they could win.

thanks for quick reply.

so cashing out daily should not matter?

i prefer to cash out daily so that i have access to that cash instead of it lying on my poker cash balance.

Your pattern of cashing out has no bearing on taxability.

It has no bearing toward taxability but might be an issue with respect to FINTRAC. A bank has an obligation to report suspicious activity and a daily $100-500 deposit from the same source looks like an attempt to circumvent the $10k reporting rule and would likely get flagged. That being said a once a month $10k deposit would definitely get reported so really you are no worse off.

Bump.

I play poker professionaly since this year and I'm going to make about 100k$ this year. I have no job and am not a student so that's my main income. In the next year I plan on buying a car, and maybe eventually a house.

Should I def pay taxes?

Possibly, but no, not necessarily.

Bump. I've spent some time skimming through the whole thread, and lots of good discussion, thanks to everyone who's contributed. I'm still a bit confused about under what circumstances we should be paying taxes.

Equal responded to this post saying that this person does not need to pay taxes. Am I right in assuming that as long as poker is a "hobby" and not your full time income, then it's not taxable? Even if you expect to make a positive expectation in your hobby...?

So what about full time students doing the same thing, playing about 1 hour an evening...?

Thanks!

If you have a reasonable expectation of profit you are legally supposed to pay taxes. It does not matter how often you play or if you have another job. These things are however important factors in whether you are likely to get caught if you choose not to pay.

There is no answer because the law is vague. We have two practising lawyers and an unemployed guy with an LLB from a law school that was somewhat tax-centric and we can't agree on most situations.

No. If poker is your main source of income or a secondary source does not matter. The question of is it taxable income or a windfall is based on how you go about playing poker and has nothing to do with if you are employed or not. The reason employment matters is because of detection. If you have a job then assuming your employment income is greater than your poker income and sufficient to explain your lifestyle then it offers you some camouflage and makes it difficult to detect that you have undeclared income. A second reason I believe it will matter is in that the lack of employment implies that the individual expected to be able to pay the bills from poker.

My interpretation is that legally you should be paying taxes if you have been a winning player for 6-8 months and you play a couple of hours every day. That you are a student is not a consideration. There is a four part test that has been mentioned multiple times in this topic. Someone who plays several days a week, is a winning player, has been at this for long enough that it is not just fluke (I figure 6-8 months is a good period), and studies the game either by reading books, 2P2, or using PT is taxable.

Now just because you are technically on the side that should be paying taxes doesn't mean you should. I don't believe anyone should pay income tax. Let CRA do the work -- they won't because they are lazy and not that bright -- of first getting a case where the law is made clear. Till that happens don't do anything. When they go after people -- and they will soon -- it won't be after the student who plays a few hours a day. Wait till they nail a pro and make the law clear then reevaluate what you want to do.

Ah okay, that makes a lot of sense now. Thanks for the quick and helpful reply.

This is a little imprecise.

The question is whether poker is giving rise to income "from a source." The determination of whether a particular activity gives rise to characterization as income "from a source" is not entirely independent of whether one has employment (though it is very close to being independent).

Here's why. Theoretically, poker is an arm's race. As a matter of epistemology, it is impossible to state at any moment whether one is ahead or behind in the poker arm's race. A significant track record of success is one indicia, as is relying on poker for one's livelihood, because of what it reveals about one's state of mind.

This is why, in my considered view, being employed full-time and playing casually for an hour a day can be treated conceptually differently from playing an hour a day with exactly the same cash flows--it gives rise to a substantively and qualitatively different subjective expectation of profit, which will be related on average with a higher objective expectation of profit. Of course, there are deluded ("unlucky") losers and deluded ("pro") winners, too, which render this only an "on average" conclusion.

I think where we disagree is on poker being an arms race. Admittedly poker is more of a hobby for me but I have played the game for close to twenty years and I think winning players are winning players and losing players are losing players. You get situations like the influx of ******s after a big event like Moneymaker winning WSOP but that is an abnormality. I realize my view is a minority view among people who aspire to be poker pros but I don't see it as something that has this constant elevation in what is required to be a winning player but rather more as a binary situation.

OK, so I understand that I should be paying taxes, I am fully a professional player since this year. What I am curious about, is if I don't pay taxes, and CRA comes after me in lets say two years, what will they do? Will they just backtax me for what they deem I should owe plus some percentage of interest on that money? Will they drop the interest that would have built up? I think I will pay taxes this year because I just don't want to have to worry about these things. I hate it being on the back of my mind, especially everytime I purchase something.

But I guess what I am asking is, with there being no confirmed causes where they have gone after a professional poker guy and won, and being that a lot of people think it is tax free, is the worst that could happen if they catch up to you and you didn't pay, is that you would owe the interest on top of the money you would have already owed if you had paid it each year?

Personally I think it is hard to tax because there are so many variables, I could move up to a higher limit tomorrow and go broke, or I could hit a really bad streak of variance. Unlikely but I think it should be taxed more like capital gains

It's taxed as business income not as a salary or capital gain. so if you have losses for one year you can deduct them from the taxable income of the three previous years or the 20 upcoming years as non-capital losses. So what that means is that in your losing year you get to deduct your losses on the T1 of the previous year (assuming you won and paid taxes) and you get a cheque as a rebate on taxes you've already paid. What's also great about non-capital losses is that you can deduct them from any other type of income, i.e. salary, capital gains, etc., not just business income

As for whether you should pay or not. While the law, the way it's written, makes a clear cut case that a full-time winning online poker player who studies the game must pay taxes, no one has been pursued for such taxes as of yet. I have a couple of friends who are studying tax law at Osgoode and both have said that I shouldn't pay any taxes on poker no matter how much I make. I showed them the law and my interpretation (the twoplustwo interpretation) and they agreed with that interpretation. However, after verifying with their profs, they told me that since there is no precedent yet, the worst that could happen if I don't pay taxes now is that I have to pay the back taxes in the future plus interest. It would be exremely unlikely that I'd have to pay a fine or go to jail because of the lack of precedent (pleading ignorance would be feasible). They even argued that I might be able to evade interest as well if back taxes were to be pursued.

It is not accurate that there is no case law on this. I can list at least a dozen cases where it clearly states that poker winnings are taxable for a professional player. The issue is only with what constitutes professional.

Yes but there are strategies that can be used to declare the least amount of income yet be good with Revenue Canada

Would you care to elaborate?

support of claim?

If you are worried about them getting after you. Go to any race track and scoop tickets off the ground and use that to offset your profits. Obviously you can only use so many dead tickets. But that can nullify a lot of tax money for the hobbyist/ low level pro.

Mostly based on history and social interaction with people.

Will not work. A bunch of losing tickets does not change the fact that your net worth can not be explained by your reported income.

Henry is so right. When all your money is strictly coming from poker and that is all you do. You will have no argument.

Keep in mind with tax law you are guilty till proven innocent.

Though like I said there are many strategies to pay the minimum

Poor Strategy. Bottom line $ in and $ out.

Can you PM the strategies if you don't want to discuss it here? Thanks