Canadian Online Poker Tax Thread

[4thstreetpete]

Hi guys, there seems to be a lot of confusion when it comes to paying taxes on online poker in Canada. Please keep all discussion regarding taxes in Canada in this thread for Canadian players (as well as people from abroad who may be contemplating moving to Canada or just interested in this subject).

First, I like to say that I am in no way qualified to give legal advice. From reading the various forums and researching with CCRA I have a few things to add.

I see a lot of posters here vehemently declaring that there are no taxes on gambling in Canada and that you don't have to pay taxes on gambling winnings. Trust me, I would like nothing better than to believe that this is true. However this only partially correct.

After reading the official website for the CCRA, (looking under "other types of income, ie gambling) they do bring up the subject of "reasonable expectation of profit". This is a very gray area, and is very vague. You can be taxed on carrying the business of gambling, as well as placing bets and wagering. A poster in the another thread stated that it does not necessarily have to do with how much you won but by the frequency of your activity. This is absolutely correct.

What does this all mean? Basically, if you're a for lack of a better term 'recreational player' then it's a fair assumption that you won't get taxed. However if you play very frequently and show a consistent profit for an extended amount of time, then you will fall into the dreaded category of "reasonable expectation of profit" and be deemed a professional gambler.

As far as I know no one has ever been busted for this, I could be wrong. However that doesn't mean that this won't happen in the future. Please remember that professional gamblers get taxed for their winnings and you're hardly unique in what you are doing.
If you make any considerable amount of money in poker and it seems like a lot of us in this forum do, it's best to consult with a qualified tax attorney to give you all the answers before you think about not paying your taxes on poker winnings.

If anyone have anything to add please feel free.

I know this is a sensitive subject but I would like to know of any canadian players who have paid taxes on their winnings in the past or have seeked legal advice on this subject, it would be of great help. Thanks.

[Malone Brown]

I don't understand how the government could distinguish between professional and recreational players. Couldn't a person who plays for a living state that he got lucky in a tournament and won $x and is living off that, thus being a rec player that got lucky once? Your playing habits cannot be tracked can they? I'm curious about this too because I am a Canadian playing for a living while overseas.
Malone

[Equal]

Good thread. I am several of my friends are in this very precarious position - being pro players (i.e. having no other source of income) in Canada.

I recently talked to a tax lady as I filed my 2003 return. While she had not heard of someone playing poker online, she had handled professional gamblers before.

She referred me to:

Rev Canada link - Miscellaneous Receipts

Sections 3, 10 and 11 appear to have relevance to us.

The phrase "reasonable expectation of profit" seems to be the key phrase.

I have a couple questions:

1 - Since I have been making withdrawals from neteller straight into my Canadian Bank account I am leaving a paper trail of income. Does this mean I should declare this?

2 - I have made a couple withdrawals by using the Neteller Debit card - is this trackable by Revenue Canada?

3 - How would I convince Revenue Canada that poker winnings are a "windfall" and do not suggest a "reasonable expectation of profit"?

4 - Do I need to go to a tax attorney?

5 - Davidross, can you comment on this subject?

[4thstreetpete]

[ QUOTE ]
Good thread. I am several of my friends are in this very precarious position - being pro players (i.e. having no other source of income) in Canada.

I have a couple questions:

1 - Since I have been making withdrawals from neteller straight into my Canadian Bank account I am leaving a paper trail of income. Does this mean I should declare this?

2 - I have made a couple withdrawals by using the Neteller Debit card - is this trackable by Revenue Canada?

3 - How would I convince Revenue Canada that poker winnings are a "windfall" and do not suggest a "reasonable expectation of profit"?

4 - Do I need to go to a tax attorney?

5 - Davidross, can you comment on this subject?

[/ QUOTE ]

I'm pretty sure Revenue Canada can access your neteller transaction history if they wanted to. Whether they do that or not is up in the air. If they do question you, you will have to explain it. On your bank statements it does link back to neteller and besides Neteller is a publically traded company located in Canada.

If you're pulling in say $500 a week on a consistent basis, I think you're going to have a pretty hard time convincing Rev Canada that it is a 'windfall'.

Which leaves me wondering. Would it be better to say cash out a huge amount say $50,000 every 6 months and try to claim that as a windfall? or you're better off cashing out a few hundred every week? [img]/images/graemlins/wink.gif[/img]

[King Jak]

[ QUOTE ]


1 - Since I have been making withdrawals from neteller straight into my Canadian Bank account I am leaving a paper trail of income. Does this mean I should declare this?

2 - I have made a couple withdrawals by using the Neteller Debit card - is this trackable by Revenue Canada?



[/ QUOTE ]

I believe that neteller asks you for your social insurance number in case Revenue Canada needs to tracks stuff. I asked the people in Calgary (neteller's office) why it was required and do they forward information to the CCRA. They said that they would if required. And that CCRA requires you SIN number.

[myst1]

Hey guys, me again. I posted this in another thread, reposting it here. A few things have changed since my last post, including much bigger wins this year.

I'm in the same situation as most of you, only I'm probably a bigger target for the CRA. My profits last year were around $1 million, and this year a little over $2.5 million. There are my first 2 years of professional play, and most of it is easily trackable because they are live tournament winnings.

My financial advisor told me to incorporate myself, which I did, and we moved all of the funds into my business account, and then into my current investment portfolio. We are submitting our case to the CRA, so that we get a decisive ruling right away. Could this be a bad idea? The only thing I know is that I don't want to break any laws.

My financial advisor has tried to assure me that even if they decide to tax me, I will end up having to pay very little taxes, after making investments in flow-through shares and other tax-credit investments, and write-offs.

I'm still a little worried though. Does anyone with knowledge in the field see any holes in my plan? My last resort would be to detach myself from Canada and become a non-resident for 6 months plus a day, and then my earnings for 2007 would be non-taxable. Is there a minimum number of years I would have to stay out of Canada before I could return?

[PatInTheHat]

Thanks for the update Myst1. Please let us know how it goes.

[Rainbow Warrior]

[ QUOTE ]
Hey guys, me again. I posted this in another thread, reposting it here. A few things have changed since my last post, including much bigger wins this year.

I'm in the same situation as most of you, only I'm probably a bigger target for the CRA. My profits last year were around $1 million, and this year a little over $2.5 million. There are my first 2 years of professional play, and most of it is easily trackable because they are live tournament winnings.

My financial advisor told me to incorporate myself, which I did, and we moved all of the funds into my business account, and then into my current investment portfolio. We are submitting our case to the CRA, so that we get a decisive ruling right away. Could this be a bad idea? The only thing I know is that I don't want to break any laws.

My financial advisor has tried to assure me that even if they decide to tax me, I will end up having to pay very little taxes, after making investments in flow-through shares and other tax-credit investments, and write-offs.

I'm still a little worried though. Does anyone with knowledge in the field see any holes in my plan? My last resort would be to detach myself from Canada and become a non-resident for 6 months plus a day, and then my earnings for 2007 would be non-taxable. Is there a minimum number of years I would have to stay out of Canada before I could return?

[/ QUOTE ]


You can't trust any of those Professional Tax Advisors, Lawyers or Accountants.

You've come to the right place.

[pyedog]

[ QUOTE ]
[ QUOTE ]
Hey guys, me again. I posted this in another thread, reposting it here. A few things have changed since my last post, including much bigger wins this year.

I'm in the same situation as most of you, only I'm probably a bigger target for the CRA. My profits last year were around $1 million, and this year a little over $2.5 million. There are my first 2 years of professional play, and most of it is easily trackable because they are live tournament winnings.

My financial advisor told me to incorporate myself, which I did, and we moved all of the funds into my business account, and then into my current investment portfolio. We are submitting our case to the CRA, so that we get a decisive ruling right away. Could this be a bad idea? The only thing I know is that I don't want to break any laws.

My financial advisor has tried to assure me that even if they decide to tax me, I will end up having to pay very little taxes, after making investments in flow-through shares and other tax-credit investments, and write-offs.

I'm still a little worried though. Does anyone with knowledge in the field see any holes in my plan? My last resort would be to detach myself from Canada and become a non-resident for 6 months plus a day, and then my earnings for 2007 would be non-taxable. Is there a minimum number of years I would have to stay out of Canada before I could return?

[/ QUOTE ]


You can't trust any of those Professional Tax Advisors, Lawyers or Accountants.

You've come to the right place.

[/ QUOTE ]
I'm not sure if you're being sarcastic, but I'm assuming you are.

To me it seems like the people you listed have no idea about this issue either. I think that someone with some legal or accounting experience but with poker knowledge might be almost as helpful as an experienced accountant or tax lawyer with absolutely no experience in poker or gambling taxation.

And it seems like Canada has very few professional gamblers. So that means there are even fewer of these tax professionals with tax experience related to gambling. The CRA also doesn't seem to want to elaborate on their laws.

To me it seems like the Canadians who pay taxes on their poker winnings do it because of a "better safe than sorry" attitude. But if you call up these tax firms then they seem just as confused as the rest of us.

[myst1]

[ QUOTE ]

You can't trust any of those Professional Tax Advisors, Lawyers or Accountants.

You've come to the right place.

[/ QUOTE ]

I've honestly talked to about 20 professionals, and I don't think any 2 answers were exactly the same. There are very few professional poker player who reside in Canada, meaning almost no professionals have experience with this. TorontoCFE and a few others seem to really know what they are talking about, and I was hoping to get some answers.