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Do you pay taxes on casino winnings in Canada?

By Alexander Liam.
Fact checked by Wilbur Thompson.

If your main source of income is winnings from games of fortune and chance and your ruling passion is games of luck, and you even can call gambling your occupation, Canada is definitely one of the finest places to live for such a person.

So, why is Canada so attractive for gamblers, especially professionals? The reason is that the vast majority of players of the Great White North will never pay a single penny of taxes on their precious winnings.

The paradigm of non-taxing winnings from gambling is even much older than the country of Canada itself. It is rooted in England and states that unless a citizen doesn’t make a living only from gambling winnings or doesn’t run gambling operations as a business, he is exempt from taxes on such type of income. That is why all winnings and prizes from stakes on such things as sports betting, lotteries, table games, horse racing, casino games and other gambling contests and games of fortune and chance are rarely taxed in Canada, which adopted core legislation from the UK.

Do I pay taxes on casino winnings?

Canada’s casino tax legislations have different regulations concerning gambling winnings, but most probably not.

According to the  Income Tax Act, more specifically paragraph 40(2)(f), there is only one provision that obligates Canadian gamers to declare all winnings from the games of luck and file them and pay taxes from them – when a Canadian citizen is a professional gambler.

It should be mentioned that the status of professional or nonprofessional gambler defines the government of Canada with a foundation of several key factors. It is also worth noting that gambling tax laws differ from the Criminal Code legislation that determines the whole functioning of the gambling sphere in the entire territory of Canada.

For Fun Gamers And Professionals

Concerning determination is gambling an occupation or just a hobby Canadian government is very scrupulous in specifying professional gamblers and non-professional (for fun) gamblers.

In the eyes of Canadian law, you can’t be classified as a professional gambler just for spending a lot of time and money in different gambling establishments. Even frequent winnings are not an indication of the designation of a gambler as an occupation.

In Canada, you can be classified as a professional gambler if you determine your gambling operations like a business or if you have some professional or expertise skills and use them to make a profit on a routine basis. The other important factor that can determine a Canadian citizen as a professional in the gambling sphere is that winnings on a game of luck are its only source of revenue. 

So, on the basis of the foregoing, it is easy to answer the question, do you pay taxes on casino winnings in Canada if you are a non-professional gamer? No one has to pay any taxes independently of the amount of a winning sum as a for-fun non-professional player in Canada.

The spectrum of non-professional gamblers is rather wide in the territory of The Great White North. Compulsive gamblers, gambling sets and betting fans all fall into a category of non-pros in Canada, and no one of them needs to worry about paying taxes on their gaming winnings. But, it should be mentioned, that under such conditions in Canada, you can’t file your losses as a deduction from the income when you are a non-pro player.

The bare truth is that when it comes to classifying people as professional gamblers – Canadian law is very unwilling about it. That makes the Great White North one of the best inhabitants for gamers.

Here is the list of exact criteria the Canada Revenue Agency (CRA) uses to define if a taxpayer’s activities are such that they can be considered as professional activity or gambling business:

  • how detailed organization of the processes that are present in the pursuit of this activity by the taxpayer,
  • the existence of specific skills and professional information that give the taxpayer an ability to reduce the element of chance,
  • the taxpayer’s intention. Is it based on the pleasure of participating in a game or on a willingness to get some profit?

Nonetheless, none of the factors can give occasion to CRA to impose a tax obligation on a person without any other reasoning.

Tax Rate on Casino Winnings in Canada

In case when you are determined by the tax bureau of the Canadian federal government and most provincial and territorial governments, called The Canada Revenue Agency (CRA) as a professional gambler, your winnings from the games of fortune and chance will be officially considered your revenue. This means that it will be taxed in the same way as any other regular job in accordance with the same rules.

There is only one exception regarding taxation of winnings that appeals to professional gamblers in the Great White North. The Canada Revenue Agency differentiates winnings from such games as poker, blackjack, roulette, baccarat, even sports and horserace betting, and all other games which claim skills of any kind to win besides luck and lotteries which are based on luck one hundred percent. As long as there are no chances to increase the odds of winning in a lottery besides purchasing more lottery tickets, CRA considers all lottery winnings as fortune, and even professional participants of games of fortune and chance are free from taxation of such funds.

The primary benefit of the official financial status of a gambler is that it allows deducting expenses and losses from the income if you run your gaming career as a business. On the territory of the Great White North, income tax rates depend on pure income, so you can save a lot using tax-allowed deductions.

The Difference Between Online and Offline Winning Taxation

In terms of winnings from games of fortune and chance on the Web and winnings from traditional land-based gambling enterprises, there is no difference in the eyes of Canadian law.

The Income Tax Act doesn’t discern offline and online gambling. From this, it follows that they are regulated by the same rules and have the same standards.

If you are not a professional participant in games of fortune and chance and have other sources of income, there is no need to pay taxes on winnings whether you got lucky online or at any of the land-based gambling establishments.

Regulations in Provinces and Territories

Each province and territory of the Great White North has its own gambling laws and regulators that control the work of gambling establishments as well as all forms of online gambling, but when it comes to taxation of gaming winnings, the rules are the same for all administrative divisions within a country.

Gambling in Foreign Countries

Playing outside Canada, all Canadian gamblers, both pros and non-pros, should remember that they can bump up against undertaking to pay taxes on their winnings. For example, Canadians that play in the United States may lose up to thirty percent of the winning funds after taxes. That is because the US and Canada have a tax treaty. According to it, the revenue service of the United States federal government, well-known as IRS (Internal Revenue Service), is taxing the winnings of gamers from the Great White North.