If you love gambling and lotteries because of the chance to win big money, Canada is a great country to do so. Canadian casino players will never pay a dollar in tax on their casino winnings.
The reason why Canadian government doesn’t tax casino players lies back in history. The thing is that anyone who gambles for fun only and doesn’t treat gambling as a business should not pay any taxes. So, the winnings from casino games, sports betting, poker, lotteries, horse racing, and other gambling games are non-taxable. Still, there are some restrictions.
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Gambling Taxation in Canada
The Income Tax Act says that unless you are a professional gambler, you don’t have to declare the gambling-related winnings. But how does the government know you gamble professionally or not? There are a few factors that determine you make a living from casino games and should pay taxes on your winnings.
Mind also that the laws of the Criminal Code regulate gambling of all kind in Canada, but laws that regulate gambling tax are different.
Gambling Taxes in Provinces
All ten provinces and three territories of Canada have different gambling laws that control online casinos and land-based gambling venues. However, when it comes to taxes, they depend on Federal Law. Thus, once again, unless you are a professional gambler you don’t have to pay taxes on winnings no matter in what part of Canada you live. .
What If You Win Staying Outside Canada
Many Canadians travel to the US to gamble or bet on single sport events, which is not yet available in Canada. So, if you’ve won a big sum of money in American gambling venues, you should understand the taxation rules. You may face a 30% withholding tax on your winnings if you gamble in the US.
According to the treaty between Canada and the United States, the Internal Revenue Service can tax Canadians who play at casinos within the territory of states. However, there is good news for you in this situation. Count your losses, prove the gambling expenses, and you can get it back. You need to apply for the US tax number and complete the forms proving your losses, then you can grab your money back. Remember, the more you win, the more you can get back.
Taxes For Professional Gamblers
Maybe you think that you are a professional gambler if you spend much effort and time on gambling. But even consistent winnings are not enough to draw the attention of the taxation authorities. Then what determines you as a professional?
Taxation authorities will be interested in you if you operate gambling like a business or systematically apply skills to make a profit consistently. That’s why poker players will be more likely classified as professional gamblers than those who wager on sports and online casino games.
Besides, if you don’t have a job or another source of income but gambling, it will almost certainly make you a professional gambler in the eyes of the government.
So, in the case of professional gambling, you will have to pay taxes on your winnings.
Income Tax & Gambling
Supposing that the Canadian Revenue Agency (CRA) determines you as a professional gambler, your winnings aka income will be taxed according to the taxation rules of general income from a job. Moreover, you can deduct your gambling losses and expenses just like self-employed people. So, we advise you to keep records of your losses and use any opportunity and legal loopholes to deduct what belongs to you.
Depending on the amount of your win, you will pay a certain percentage in tax. Here are some of the basic tax brackets in Canadian law:
- You earn no more than $46,605, 15% goes to taxes.
- As you earn $51,281, you pay 26% in tax.
- From winning over $205,842, you have to pay 33% in tax.
All in all, the higher your win, the more you will have to pay as a tax. So, consider this when you build your income as a professional gambler.
Players Who Gamble For Fun
The law says that players who gamble for fun regardless of how much they win never have to pay a cent in tax. You can be a compulsive gambler or sports bettor who doesn’t miss any sports event, but as long as you don’t earn money with it, you won’t pay taxes on winnings. You also need to understand that you can’t deduct losses from your gambling income if you don’t make a living doing so.
Winnings made with lottery tickets, poker, sports betting, scratch cards, casino games whether they are online or in a land-based venue are not subject to taxation for non-professional gamblers.
No matter how much you have won or how long you’ve been gambling, the taxation authorities won’t oblige you to pay a percentage of your winning. Even if you won several millions of dollars playing a lottery, you can rest assured and grab all your money into your pocket.
Online Gambling & Taxes
There is not much difference between online and land-based gambling taxation. The same rules are applied to both types of gambling. However, we should warn you if you prefer playing online poker. The thing with poker is that it’s a very profitable game. Professional players know that one can consistently make a living by playing poker games. The skills necessary for poker are significant, and it makes the taxation authorities keep an eye on you. So, if you want to play poker but resist paying taxes, it’s reasonable to have a stable job while also making a profit from poker.
The majority of Canadian casino players should not worry about paying taxes. Gambling was made for fun, and the chances of winning big are pretty small, so Canadian government doesn’t apply income tax in this case. No matter how much you win, feel free to take all your money home. However, if you are gambling professionally and treat it as a real job, then you should remember about the taxation rules in Canada and use all the instruments to deduct your losses.
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As a Canadian citizen, you don’t need to pay taxes on winnings in your country. But if you travel to the US and specifically to Vegas city, things are different. You will have to pay tax on your winnings over US$1,200. The 30% of your winning will be automatically deducted when you go to cash out.
If you are not a Canadian resident and travel here to gamble, you won’t pay any taxes when you win money. No matter how much you made. However, if you bought a winning lottery ticket, for example, and left Canada before the day of draw results, then it will probably be difficult to collect your winnings.
As a professional gambler, you will have to pay taxes on your income from casino games. In this case, you have two options. You can file your tax and declare it or remit taxes during a year. Typically, gambling taxes are paid every three months at a certain percentage.