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A Guide to Gambling Taxes In Canada

Gambling Tax In Canada

Taxes are a Canadian's worst nightmare. They are a dreaded cloud which looms over perhaps everything bold and beautiful. When it comes to online gambling, one of the first questions a player asks is whether or not they have to pay taxes on casino winnings? We have great news for you!

If you are a recreational player and citizen of Canada, take a breath and let go of the tax worry. Consumer friendly laws in Canada state that winnings are totally tax free. No one is going to come knocking on your door demanding you hand it over to the big man. You can have as much fun as you want and keep every cent you so rightfully earned. That being said, there are still a few things we should discuss.

Tax Resources

Gambling & Taxation

http://laws.justice.gc.ca/eng/regulations/C.R.C.,_c._945/ Enjoy tax free winnings if you're a gambler in Canada.

Tax-Exemption Status

http://www.gamingcounsel.co/pdf/The%20Tax-Exempt%20Status%20of%20Gambling%20Winnings%20in%20Canada.pdf Read up on Canadian gambling and the tax-exemption status.

Canada Revenue Agency

https://www.canada.ca/en/revenue-agency.html If you're a pro player, be sure to brush up on Canada's income tax laws.

No gambling related activity can be taxed because it is not a constant source of income and did not come from employment, property or other viable source. Gambling is also not considered a business and most Canadians do not make a living on their winnings. In the laws eyes, taxing this would not be fair or just.

Do Canadians Have To Pay Tax On Gambling Winnings?

No - Canadians do not have to pay taxes on gambling winnings from horse racing, sports betting, lotteries, online casinos and any other games of chance. However, if you earn interest on your winnings, you must legally declare that on a T5 form. This interest is taxable. Should you be caught not paying taxes on this, you could be fined.

Do Professional Gamblers Have To Pay Tax?

If you are a full time gambler, online or offline, and make a living from betting, you are required to file taxes. Professional poker players, blackjack players or any other professional gambler are viewed as operating their own freelance business. This is taxable in Canada.

There is a catch to this. So far, the Canada Revenue Agency is slow to assess and audit people whose source of income comes from gambling. The reason being is that they are said to operate a business and those business profits are taxable. However, this same business can accumulate significant losses which reduce income and income from other businesses. If the CRA started to forcefully tax these pro players, there could be a very damaging domino effect throughout the country. We're not saying to avoid paying taxes, as you should, but this information is there to help you better understand the situation.

Do Canadians Pay Taxes On Lottery Winnings?

No - The Canada Revenue Agency states you don't have to pay tax on lottery winnings from OLG or other lottos, or report them. That said, if you earn interest on them, that amount can be subject to taxation.

What About Gambling in The USA Or Vegas As a Canadian Citizen?

Unfortunately, US Citizens have to pay almost half of any gambling winnings to the tax man. If you head over to the land of the red, white and blue to gamble, you will have to pay taxes on anything over $1200 USD. If you think you can just not declare it, think again. When you walk up to that booth to happily cash out, 30% is automatically deducted. You don't even have a say so. That said if you are a Canadian Citizen legally working in the U.S.A., you can deduct any gambling losses which occurred in the states and receive a tax refund based upon that.

Canadian Gambling Tax - A Summary

To Put Things Frankly

Our Disclaimer

While we are a team of gambling experts, we do not claim to be lawyers in any way. Laws in Canada change on a regular basis; this includes tax laws. If you are unsure about playing online or hesitant about not claiming your taxes, do your own research or contact a tax consultant for peace of mind.

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