One significant quibble: dividends are not deductible to the corporation.

You also wouldn't want to have much -- if any -- salary. You should be using dividends to shift money from the corporation to yourself.

i haven't filed my taxes in ~4 years......last time i did my tax i think was in 2006.

i have close to 100K in my bank, all of it from online poker.


whats are the consequences of not filing your taxes for that many years in a row?
can the govt freeze my bank account?




ps: i am unemployed, all my income is from online poker.

You need to tell us how much you actually made from online poker not just how much you have in a savings account.

Also relevant is your living arrangements -- rent / own / parents?

Province of residence?

What you realistically see your poker future as being? Do you expect to make more in the future or are you in the camp that thinks poker is getting harder and looking for a real job in the near future?

The advice I would give to someone who makes $30k and saves $25k of it while living at home is very different than the advice I would give someone who is making $200k and living it up.

made ~70K last year from poker, ~ half of that the two year before.....the money i have in my bank is all from online poker winnings. i don't remember the last time i had a real job...maybe 5 years ago.

currently living with my brother in a rented condo (i pay half the rent but my name not in the lease), tried to get my own place last summer but failed since i don't have real job, no tax slips to show, not having the best credit score etc. most likely getting my own place this summer, even if it means paying 6 month rent up front.

ontario

i don't see myself looking for a job in the foreseeable future for sure. so planning on playing poker for the next couple of years at least.


haven't filed my taxes 4 years in a row now, and don't plan on doing it this year either. problem?

pls respond

This is a pretty critical issue to be educated on but you can't even be bothered to read this thread? Pretty easy to skim past the fluff and read all the key post, not to mention the detailed e-book that was posted on this issue (http://www.taxwiki.ca/file/view/taxwiki_ebook_1.pdf).

Here is a post directly from this very thread:

Quote:
Originally Posted by QuarterTon View Post
Can you elaborate a bit TorontoCFE? Were they forced to pay taxes or had they already been paying? if they hadnt been paying their taxes did they get the expected penelties etc?
Of the 6 I have most knowledge of:

1. 5 came to the attention of the CRA because of activities not related to poker. What attracted attention was things like too many all-cash deals, not reporting investment income and a normal business audit.

2.1 was reported by a neighbour. This led to many large deposits being found and a check of their income tax return showed no income reported for 3 years (after the guy had made a decent living for 10 years and dutifully filed correctly.

3. In 3 cases, the income from poker was not significant for the CRA to worry about and they focused on the other activiities. In 2 the person accepted a reassessment to include poker in their income and paid the tax without further fight in order to get the matter resolved. They paid only the tax with no penalty or even interest. In 1 the issue is still waiting to be resolved.

My understanding (3 party) to the cases was the CRA is implying (as the are wont to do) that if:
1. The amount involved is not significant they won't waste their time and will overlook it even if they are aware of the earnings.
2. If the amount is large and they think you haven't been trying to hide your activities and don't test them in court , they will want their tax and be happy with that.
3. If you do take it to court, they are looking for the tax plus another amount equal to the tax as a penalty, plus interest.
4. There is no desire to go for criminal or anything but monetary damages if only poker earnings are involved.

I'm aware of these cases through friends / associates so some of the details (which may or may not be important) I may not know of.
I am not directly representing any one who has been audited.

My personal take on this.

If you're very lucky you'll get by for years more not paying tax as long as you have no desire to buy a nice car or a condo/house/ect. If they do catch up to you, there is a chance you will just have to pay the amount you're overdue with no interest or penalties. So at a minimum you should have this amount on standby in your account so they don't bury you (file your tax every year to get the number, but instead of submitting, just make sure you have the cash in your account).

Still there is no guarantee that you won't get interest and penalties applied. Eventually there will be a first. So if you have the money in the bank anyway, you plan on making a career out of this, and you want to acquire significant assets in Canada, then why not just pay? Eventually you'll have to anyway. Either that or start making plans to expatriate.

Suppose a person played their first year fulltime in 2010, made 200k. Prior to 2010, he had regular jobs and filed a tax return. This person doesn't live a flashy lifestyle nor does this person make any big purchases. They plan to continue a fulltime online poker future for as long as the games are still significantly profitable (this could be 6 months or 6 years). A stance is taken that poker is gambling, and when a poker player becomes a statistically proven winning player is a hard line to draw, and this person has seen top pros go bust, so figures it is still a possibility he is lucky, etc, and this person does not declare winnings. He invests regularly in dividend stocks. This person is willing to suffer the consequences of owing back taxes in the future (perhaps interest) if such an event did arise and plans for that financially.

Does it make the most sense to file a tax return, declare no income besides dividents received and capital gains (though reinvested)? Or not file anything?

And suppose this person lived in Manitoba until Nov 2010 and then B.C. afterwards.

sbfootball_84

I would do nothing and hope for the best. You should be paying but they likely will not bother you unless there is a change in the way CRA behaves.

banalanal

You can't just not file if you have income. Financial institutions have reporting obligations and when CRA gets the info and no matching tax return from you they will contact you and ask you to file.

Ok, thanks for the reply Henry. I'm completely ignorant when it comes to tax processes.

You should file every year even if you plan to take the position that your poker winnings are not "income from a source." There are a number of good reasons for this, including being able to open a TFSA, making good on reporting interest and other forms of income (to show you're taking tax obligations into account, and not simply ignoring tax obligations). Even if the alternative is filing a nil return, I think it's probably the wisest thing to do.

Alright, thanks again very much for the insight.

Hello,

I recently won a tournament in the States cashing $15.1k. I was taxed 30% ($4540) right away at the casino but I have been told that I can claim all of this back. I'm sure this has been addressed somewhere in this thread and if not could someone link me to the correct thread.

How do I go about claiming my money back? I am a recreational player living in BC. I will scan through this thread but there is a lot of material to go through, if someone could fast track me it would be appreciated.

Thanks

http://www.google.ca/search?q=canadi...fda7529e033a9d

Has anyone here had experience with moving to a country with no income tax laws? I've been exploring the possibility.

How do the taxes involving staking work? I don't remember seeing anything addressing that in this thread.

I want to know if moneybookers is considered as a Financial institutions and if they have reporting obligations here?

Hi everyone,

I just wanted to get some opinions on whether playing in big live events would increase my chances of getting flagged and running into problems, should I be fortunate enough to actually cash big. I would not play in the U.S. or anywhere else they would withhold taxes from winnings.

Thanks for the input, as always.

Neonclaws

If you are living on your poker income, you should be paying taxes on it already, so none of this should be a problem for you.

However, let's assume that you aren't, that you're a recreational/hobby player who likes to occasionally donk off some of their money into tournaments. Let's say you get lucky and win a big one.

If you, for example, won a EPT event and said that you were an online poker professional during your post-interviews, someone at Revenue Canada might wonder why you have yet to bother to pay taxes on your winnings. (IIRC, that was the problem with the guy from Quebec who bragged to a newspaper reporter that he had won six figures playing online poker.)

With places such as the Hendon Mob tracking virtually every big poker tournament that you might win at, I'm highly confident that someone at Revenue Canada *could* examine the Canadian top tournament cashes for 2011 list, track down each person with a Canadian flag beside their name, and ask why you haven't claimed any of those poker tournament victories on your taxes this year. The probability that this will happen soon is low.

For all intents and purposes, unless you're going to win something really high-profile (such as the WSOP Main Event), or say something phenomenally stupid to a reporter indicating that you've earned millions playing online poker, it's unlikely to get you flagged for special treatment.

(Henry/TaxGuru/TorontoCFE, feel free to smack me around if you think I've got this wrong.)

That is pretty much how I see it as except that I don't think the probability is low. I flip-flop on my opinion. Sometimes I think it is low and sometimes I think it is almost certain that we'll have CRA looking for poker players in the next year or two. The inability to make up my mind stems from not being able to actually assess how many people we are talking about. I have no idea how many pros there are in Canada.

Keep filing income IMO, even if it's not 100% of your income. I've always filed income every year. I think declaring 0 is just asking for trouble.

Hey guys.

I'm quite ignorant on this subject but need some help! I recently started playing poker full time in September 2010. While going to school and working part time I built up a bankroll to the point where I've become a steady winner at SSNL.

What should I do for taxes this year? Should I only report my part time job and education? How does one in my shoes go about reporting my winnings? I believe my 2010 earnings were around $35,000, with a large portion of that being won in the 3 months playing full time.

I read somewhere that revenue canada only has 25 full time investigators who look for tax evasion. That is throughout Canada. Considering this a grey area to begin with. i wouldnt worry about it

I would be shocked if it was true that they only have 25 investigators. CRA is fairly big -- 40,000+ employees and while most do nothing but surf the internet and gossip there are certainly more than 25 investigators. I'd be surprised if there wasn't more than 25 investigators just in CIP. Actually the more I think of it I'd be surprised if there wasn't at least 25 specific investigation units. When you look at massive investigations like the recent 175,000 Canadians who got busted on a shifty gift deduction scam there is no way that is being handled by 25 people.

I have been contacted by CRA to provide additional documentation the last two years. In a non-gambling situation I know of at least a half dozen people who have been caught doing cash work because their lifestyle could not be explained by their reported income. With respect to gambling I know two individuals (well three but two were brothers so counts as one incident) who has been audited for lifestyle.