Are online casino winnings taxable in Canada?

Are online casino winnings taxable in Canada?

Wherever you live, whether it’s in the UK, the US, or Canada, the thought of having your online gambling winnings taxed could be a big black cloud over your head. For the vast majority of people who gamble online, playing table games or slots offer joy and escapism. It’s a huge bonus if you take home some winnings too – register today.

Therefore, if the government decided to tax you on that, it’s as though the happiness is being sucked out of it all.

What are the rules in Canada?

Canada has a lot of things going for it. Sometimes, even more so than the US. For example, life expectancy in Canada is three years longer, healthcare is cheaper and better north of the border, the education system is more successful, and we won’t even get started on gun control.

The same goes for online gambling. If you are a recreational player, as well as being a citizen of Canada, the law states that your winnings are totally tax free.

In fact, Canadians do not have to pay taxes on any winnings won from horse racing, sports betting, lotteries, online casinos, or any other games of chance.

However, the one caveat is that if you earn interest on your winnings, you are legally obliged to declare that on a T5 form.

Why don’t Canadians get taxed on their winnings?

The official stance on this piece of good news is that no gambling related activity can be taxed because it is “not a constant source of income and did not come from employment, property or other viable source”.

Moreover, gambling is not considered a business in Canada, and as most Canadians do not make a living solely based on their winnings, it is deemed unjust to tax them.

So what if you do make a living solely based on your winnings?

Of course, this then opens the door to gambling professionally and forging a living out of your success.

Canadian law states that if you are a full-time gambler, whether it be online or offline, and you make a living from betting, then you are required to file taxes.

This means that any professional gamblers, like poker players for example, are classified as operating their own freelance business. As a result of this, their winnings will be taxed.

Why do poker players get taxed?

Poker is a great example to use. Interestingly, being a professional poker player is categorised as “running a gambling business”. This is because the Canadian Income Tax Act dictates that a person is seen as a professional gambler if gambling is their exclusive source of income, or if the said person “uses a specific set of skills to make a long-term profit”.

As poker players develop and use their skills more than other more luck-based casino-based games, they get the raw end of the deal, and are classified as “professional”.

Obviously, you can try to go professional at anything, but your freelance business will probably not last as long as a professional roulette player!

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