Canadian legislation

[jjshabado]

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As in interesting tidbit the other day (ok maybe like a year ago) I found the requirements for registering a .ca web domain. Being the Queen (and maybe any member of the Royal Family) is one possible way to be allowed to register a .ca domain.

I thought it was funny.

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Section 2.1(m)

I still think its hilarious.

[Pog0]

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poker can technically be taxable to a few (likely the biggest longterm winners)

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Is this based on a subjective interpretation of the word 'reasonable' in 'reasonable expectation of profit'?

I've been winning for a year and a half now, so what claim, if any, could I make to not paying taxes on poker winnings?

[Superflush]

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Is this based on a subjective interpretation of the word 'reasonable' in 'reasonable expectation of profit'?

I've been winning for a year and a half now, so what claim, if any, could I make to not paying taxes on poker winnings?

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If you are just making money on poker recreationally (in Canada) then your winnings are not taxable. But if you are making money on poker for a living, then this can viewed as self employment income and all your winnings would be taxable. Similarily, if you're now subject to income taxes, you're also able to deduct all your expenses against this income (travel, buy-in fees, sharkscope, ect.). As long as there was a 'reasonable expectation of profit' from incurring the expense, it would be deductible against your income.

[Pog0]

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Is this based on a subjective interpretation of the word 'reasonable' in 'reasonable expectation of profit'?

I've been winning for a year and a half now, so what claim, if any, could I make to not paying taxes on poker winnings?

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If you are just making money on poker recreationally (in Canada) then your winnings are not taxable. But if you are making money on poker for a living, then this can viewed as self employment income and all your winnings would be taxable. Similarily, if you're now subject to income taxes, you're also able to deduct all your expenses against this income (travel, buy-in fees, sharkscope, ect.). As long as there was a 'reasonable expectation of profit' from incurring the expense, it would be deductible against your income.

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See, now I very well know that I have a reasonable expectation of profit, but that's irrelevant. What's relevant is whether the government would allow the explanation that I didn't have a reasonable expectation of profit.

[TorontoCFE]

It is whether you are in the business of poker that is the issue.

A business can be full or part time.
If the government thought that you were in the poker business, then you would have to prove that you had no special skill or knowledge giving you a better chance of sucess than mere luck would dictate and that you approached the game for some other reason than just to make money.
Not necessarily hard to prove your case, but can be tricky if you are shownto be a consistent winner.

[pyedog]

So as someone who enjoys gambling, isn't it a better bet to just not pay taxes on poker winnings and then put the onus on the government to prove that we have to pay taxes on poker and to somehow prove in court that we have a "reasonable expecatation of profit". That term is so vague. Yes I've never had a losing month in the past two years. However tonight I could win $1K or I could lose $1K and I honestly have no idea which one it will be. I think that winning is more likely but I'm not sure how reasonable of an expectation of profit that it is. If I do win then I feel that I'll have to get extremely lucky to do so.

How severe would the penalty be for not paying taxes on something that is pretty debatable to begin with? The CRA wouldn't send someone to prison for not paying taxes on something that is arguably a windfall would they? Or does the fact that someone got lucky and won $100K playing poker while unemployed make them liable for large fines or imprisonment?

I know that nobody would suggest committing a crime, but paying taxes on poker winnings in Canada seems so debatable, unlike US laws which are clear cut. It seems to me that the better approach is to just gamble and not pay them and put the onus on the government to prove that we had a "reasonable expectation of profit" after the fact, whatever that means. Won't they just make you pay the missing taxes anyways, plus some interest on top of that? I don't know anything about tax laws so I'm just speculating.

[Hock_]

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I see notihng changing, but then my ears perked up when I read the government taking a strong psoition.

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What are you referring to here?

[TorontoCFE]

You would be unlikely to go to jail over an issue that is open to some interpretation.
Likely you would be (if found guilty in tax court) required to pay the amount of tax due plus interest. They may go after a fine equal to the amount of tax not paid (thus you would pay double the tax) but that is the max without there being a deliberate attempt to evade taxes, which it wouldn't be in this case since you can say you honestly thought they weren't due.

The question then is whether you want to risk having to cough up double the tax, plus interest plus legal fees in the extremely unlikely event you are targeted.

Only each person can answer that for themselves.
I just tell people what the law says.

There are many many cases on reasonable expectation of profit being defined (though not in gaming). It's not
really that much a grey area to lawyers and accountants- the government calls this an issue of fact - you look at the case and each of the factors so see what side they balance on - there is no issue of law - that part is clear cut.

[TorontoCFE]

There was a story on TV and in a magazine about the ramifications of the US law about 3 weeks ago. The RCMP and a Minister (AG probably) both stated categorically that their position was that internet gaming was illegal.
My memory is fuzzy on exactly where this was but I will check to see if I can find it.

[pyedog]

Thanks a lot for the information TorontoCFE. I appreciate the time that you spend to respond to these tax and legislation threads.