Torontocfe:
Very good points. My work is all on the law side of this, not on the accounting.
I agree with point 6, and the point 5 as you clarified it.
I agree completely that personal services business would not apply, that's why I didn't suggest it in the first place.
Why I think it is a specified business income is because the income is related to property directly.
Sportsbetting is the most clear example. It is as you described: You put up your assets and risk getting nothing back. However, with labour remaining constant, an increase in property creates an increase in income, which is one of the tests CRA uses. So for example, it takes the same amount of work to make a $10 bet as it does for a $1000, but a $1000 bet will make 100 times as much back if it wins. The same can be applied to poker, although there are slightly more complications(Skill of players and limit).
Answer 1, I am sure you are wrong on though. Your argument about a corporation can do legally what a person can do is irrelevant. The important thing for a 201 charge is that there are now TWO persons involved. The elements of a 201 offence for requires proof of 3 elements beyond a reasonable doubt.
1) That the accused "keeps" the place, which includes ANY of
wning,occupying,assisting an owner,appearing to be an owner,having care of, having management of,using with or without consent, temporarily or permanently, a place.
2) That the place is used by persons for playing games.
3) That there is a purpose of profit.
Having a corporation provides proof of the 3rd element, and having multiple persons involved(corporation plus individual) satisfied the requirement of persons.
If you have a home game with your friends, that's fine. It's not a for profit game(no rake, etc.). If you play at home, it's also (arguably okay). But if you have a place that OTHERS use for playing games for your profit, THEN it becomes criminal.
That is what a corporation does.
That all being said, there has been no actual cases on playing online games, and very little case law on the topic at all.. less than 5, and it all dealt with companies hosting online casinos. The law is very uncertain in this entire area.
However, that also makes a big difference. If you've ever worked as or for a prosecutor, the first case in a field is always crucial. They badly want a conviction to set precedent, so they look for two things: Where the accused conduct was wrong, and where a lot of evidence is available. While voluntarily paying taxes in a corporate structure does make you look better, you are also creating piles of evidence which could work against you.
As TorontoCFE said, this isn't legal or any other kind of advice that anyone should rely on. I am just saying that I would tread very carefully in this area. The last thing anyone wants is to draw significant attention to themselves, especially when the government has been taking a "sit back and wait" approach.