Are Casino Winnings Taxable in Canada?

Whenever a Canadian citizen wins a lot of money online, either at the casino, or playing the lottery the first question they ask themselves is ‘Are Casino Winnings Taxable in Canada?’ Well, as far as online winnings go you will be glad to hear that the gambling laws in Canada are relatively straight forward.

Do You Need to Declare Your Online Casino Winnings to the Canada Revenue Agency?

Online casino winnings are a popular topic of discussion for many Canadian gamblers. The question of whether or not your winnings in the casino are taxable in Canada is one that comes up frequently,

So let’s take a look at the income tax act and tax laws on gambling in Canada, and see if we can provide some advice on what you should do if you have won a large sum of money at the casino.

Do you need to pay taxes on your online winnings at the casino? Well, you will be pleased to learn that the answer to this question is NO. Casino winnings are not taxable in Canada. Canada, being a friendly kind of place has some pretty consumer friendly laws too, which state that you are not required to report gambling winnings on your annual tax return.

So that’s the end of the article then? Well, not completely. Although you will not need to pay personal income tax on your winnings there are still a few things you need to know.

What happens if You Invest Your Gambling Winnings?

Obviously, we want you to have a good time gambling online and for you to keep all the money. Especially if you win tens of millions on the lottery! However, you should be aware that there are different tax rules regarding investing.

Whilst gambling taxes for Canadians do not exist, tax on investments do. If you go on to purchase stocks and shares, property, several businesses or anything else that may provide you with a return or interest then you will be liable for income tax.

Are Lottery Winnings Taxable in Canada?

The Canada Revenue Agency (CRA) does not collect taxes on lottery winnings in Canada. Great news then, the CRA does not tax lottery winnings. This means that you do not have to report lottery winnings on your tax return, making your windfall effectively tax free.

Any interest earned on your new found wealth may be subject to tax though. If you make any investments, or simply just live off the interest, then you are required to report it on your annual tax return.

Should Professional Gamblers Declare Their Online Casino Winnings?

Professional gamblers (unlike recreational players) are required to declare their gambling winnings on their tax return. This means that if you are a professional gambler (someone whose sole income is from gambling) you are required to report any gambling income. This includes winnings from casino games, poker tournaments, and sports betting.

The CRA does not have a specific definition for what constitutes a professional gambler, but they will consider anyone who earns income from gambling activities to be a professional gambler. This includes anyone who receives a regular salary from gambling, or who has significant gambling winnings in relation to their other income.

Are Poker Winnings Taxable in Canada?

Yes, your poker winnings are taxable in Canada if you are a recognised professional player. Online poker is a popular pastime for millions of Canadians and some players are very successful. This does not mean that they get to avoid paying taxes though.

The amount of tax you will have to pay depends on how much money you have won, but it is important to remember that all gambling winnings are taxable income.

What are the Tax Implications of Gambling in Canada?

The tax implications of gambling in Canada are simple, and straightforward. In general, gambling income is not considered to be taxable income, and you are not required to report any gambling winnings on your annual tax return.

It is important to remember that the CRA does not have a specific definition for what constitutes gambling income. This means that if gambling is your sole source of income you may be required to pay taxes on the money that you have won. For a professional gambler this could include activities such as casino games, poker tournaments, and sports betting. Generally though recreational players are able to play gambling games online completely tax free.

Here is a list of online gambling games that you do not have to pay tax on…

• Winnings at online casinos
• Horse racing bets
• Other forms of sports betting
• Purchase of lottery tickets

Do I Pay Tax if I Win at an Offshore Casino?

As of right now, there is no specific law that addresses the tax implications of gambling at offshore casinos. Canadian citizens can only be taxed in Canada if that is where they live and work. Playing at online casinos will not leave you liable for income tax.

What are the Tax Implications for a Canadian Citizen Winning at a Casino in the United States?

The tax implications of gambling in the United States are slightly different. Gambling income on games such as video slots in the USA is considered to be taxable income, and US citizens are required to report any gambling winnings over $1200 (excluding at blackjack, baccarat, craps, roulette, and big-6) on their annual tax return.

Canadian Citizens legally working in the US can deduct any gambling losses which occurred in the States and receive a tax rebate based upon that.

Can I Get a Tax Refund on Gambling Losses?

It is not possible to get a tax rebate on gambling losses. however there are circumstances where Canadians can receive a tax rebate on winnings at the casino.

If you have lived and worked in the USA you may be eligible to claim a tax refund under Article XXII of the Canada-U.S Tax Treaty. Under the provisions of this treaty, Canadians are eligible to file a US income tax form (1040NR) and recover casino taxes withheld at any live casino in the US and receive a rebate.

Source: https://fairtaxcanada.com/us-gambling-tax-recovery/

Disclaimer:

This article is not intended to be a comprehensive guide to the tax implications of gambling in Canada. For more information, or for specific professional advice regarding your personal tax situation, please speak to a qualified tax professional.