Canadian Online Poker Tax Thread

[Bobo Fett]

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I would suggest that money you make on a bonus isn't techincally gambling income.

if you're playing -ev games it can be difficult to have 'reaasonable expectation of profit'.

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Perhaps, I'm no expert.

Leaving that aside then, let's assume I'm speaking only in terms of poker bonuses/profits. If a person, for whatever reason, were to have earned money through their own play, but it appeared for all intents and purposes to have been earned by someone else, is there any way for the person who REALLY earned it to claim on their taxes and NOT be entirely screwed in the case of an audit?

[Rainbow Warrior]

[ QUOTE ]
If a person, for whatever reason, were to have earned money through their own play, but it appeared for all intents and purposes to have been earned by someone else, is there any way for the person who REALLY earned it to claim on their taxes and NOT be entirely screwed in the case of an audit?

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Appearances are only that. The person who "really earned it" is always the one who owes the taxes, no matter how it appears. I can't put my money in someone elses savings account, earn interest and have them claim it if it's MY principal.

And.. regarding bonuses and rakeback, I've always thought of them as being a part of my poker income because, in effect, they are both just a reduction in the rake paid to play poker thereby increasing my poker income.

[Bobo Fett]

[ QUOTE ]
[ QUOTE ]
If a person, for whatever reason, were to have earned money through their own play, but it appeared for all intents and purposes to have been earned by someone else, is there any way for the person who REALLY earned it to claim on their taxes and NOT be entirely screwed in the case of an audit?

[/ QUOTE ]


Appearances are only that. The person who "really earned it" is always the one who owes the taxes, no matter how it appears. I can't put my money in someone elses savings account, earn interest and have them claim it if it's MY principal.

And.. regarding bonuses and rakeback, I've always thought of them as being a part of my poker income because, in effect, they are both just a reduction in the rake paid to play poker thereby increasing my poker income.

[/ QUOTE ]

Yes, this is exactly what I want. The problem is, the person who REALLY earned it is the one in the lower tax bracket. My concern is that if there were ever an audit it might appear that we are fraudulently filing it under the person in the lower bracket to pay less taxes, when in fact we are actually just doing the right thing. Is there any way to prove who REALLY played?

[metallicafan]

hey canadians, I wonder something. If I go crazy and want to pay taxes whats the percentage to pay on poker profits?

[cmyr]

how much income tax you pay depends on how much income you have. Poker is no different then anything else, assuming you fulfill the 'reasonable expectation of profit' rubric. Talk to your CA.

[TorontoCFE]

Its a graduated rate starting at about 16 to 45 % depending on total taxable income and deductions.

[QBert80]

To other Vancouver players: I spoke with a local accountant who was recommended through a locally-based poker internet forum. She indicated that income from gambling, including poker, is not taxable unless it is your only or primary source of income, as determined by the number of hours you spend working for your taxable income. I told her I work 27 hours a week in addition to playing and she said it was close enough to full-time that I could claim my poker winnings were windfall rather than taxable income.

This advice is contradictory to what has been offered in this thread, however I am inclined to take it since it is beneficial to me and it is the only "official" advice I have received.

[atom_new]

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 ofwning,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.

[TorontoCFE]

They would take your word for it. You could have your wife demonstrate her poker skill and, assuming you seem more knowledgeable, you would be ok.

Don't forget bonuses can be treated differently than poker earnings (just like tournament winnings can be nontaxable even if your cash game earnings are).

I would think that all bonuses are technically taxable - you go after thme essentially because you think you will at worse break even on play so that you earn the bonus. That said, most bonuses aren't significant enough to be worth claiming.

[Bobo Fett]

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They would take your word for it. You could have your wife demonstrate her poker skill and, assuming you seem more knowledgeable, you would be ok.

Don't forget bonuses can be treated differently than poker earnings (just like tournament winnings can be nontaxable even if your cash game earnings are).

I would think that all bonuses are technically taxable - you go after thme essentially because you think you will at worse break even on play so that you earn the bonus. That said, most bonuses aren't significant enough to be worth claiming.

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This seems reasonable. Having given it some more thought, I would also have ample records showing playing time while my wife was at work.

As to your remarks on bonuses...I'm assuming that if one is earning 5 figures in bonuses, that would change your opinion on claiming?