Canadian Online Poker Tax Thread

[DavidNB]

A cut asnd paste from the reveunve canada about windfalls

Windfalls


3. Subject to the comments in the current version of IT-213, Prizes From Lottery Schemes, Pool System Betting and Giveaway Contests, and those in 4 and 10 below concerning Voluntary Payments and Gambling Profits, a taxpayer in receipt of an amount which can be described as a "windfall" is not subject to tax on the amount. Factors indicating that a particular receipt is a windfall include the following:

(a) the taxpayer had no enforceable claim to the payment,

(b) the taxpayer made no organized effort to receive the payment,

(c) the taxpayer neither sought after nor solicited the payment,

(d) the taxpayer had no customary or specific expectation to receive the payment,

(e) the taxpayer had no reason to expect the payment would recur,

(f) the payment was from a source that is not a customary source of income for the taxpayer,

(g) the payment was not in consideration for or in recognition of property, services or anything else provided or to be provided by the taxpayer, and

(h) the payment was not earned by the taxpayer as a result of any activity or pursuit of gain carried on by the taxpayer and was not earned in any other manner.

The factors above are based on those set out in the decision of The Queen v. Cranswick, (1982) CTC 69, 82 DTC 6073 (F.C.A.).

[pyedog]

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It depends on each unique set of circumstances.

I think most tournament winnings would be exempt unless you were a full-time circuit player.
Cash game earnings are entirely dependent on facts - I have always said 98% of players would not be taxable.

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I don't think Myst is a full time circuit player, but he played several tournaments last year with much success (dollar wise). He's also had a lot of success in cash games. He considers himself a poker professional and I don't believe that he works aside from poker. I'm just wondering what would make these two tax lawyers say that he shouldn't pay tax. Would also like to hear from Myst as the rationale the lawyers gave for their opinions.

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Yeah I don't understand this either. If Myst doesn't have to pay taxes according to those tax lawyers than no Canadian poker players do.

Man that would piss me off not only paying taxes on poker but knowing that some better players who make tons more playing full time are somehow avoiding paying them.

The stupid CRA can't even make their laws clear yet they expect us to just be honest and pay taxes we might not even have to.

[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]

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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?

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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?

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

You've come to the right place.

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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.

[DonkEEE]

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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?

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My understanding of this is that you would basically have to renounce your Canadian citizenship. Staying out of the country for 188 days will not change the tax jurisdiction in the CRA's eyes.

Please keep us posted on the ruling you receive. I was about to the do the same, but will await the decision they give you. This should be interesting.

I'm surprised there is such a great benefit in incorporating yourself. I suppose if the corporation doesn't have to pay any taxes that would make the difference, but you'll still have to pay personal income tax when you want to take money out of the company. Also, do they care if you earned the $$'s pre-Myst Inc. and move them later on into Myst Inc.? My knowledge here is very, very limited and hope to hear more from those that know. Thanks.

[atom_new]

That's definitly not right. Canada taxes based on residence, as do most other countries in the world. One of the only ones that uses citizenship as a basis for taxation is the US

[myst1]

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

You've come to the right place.

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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.

[DonkEEE]

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That's definitly not right. Canada taxes based on residence, as do most other countries in the world. One of the only ones that uses citizenship as a basis for taxation is the US

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My mistake. I think I spent too much time reading threads on US citizens wanting to take up residence elsewhere for tax purposes. Nevertheless, it's not as straightforward as simply moving to Bolivia for 188 days a year and then coming back to Canada. For those interested here's a link to some gripping words from the CRA in this regard: http://www.cra-arc.gc.ca/E/pub/tp/it...lid-e.html#P19


Myst, of course, would still be liable for the millions he's made over the last two years while living in Canada.