Gambling Taxation in Canada

If you enjoy gambling and winning some money out of it, then a country like Canada would represent just a great location. The main reason, why Canada is considered as a kind of a paradise for the online and offline (land-based) gambling lovers, lies in the Canadian Criminal Code Laws. These laws imply that the vast majority of players (including all non-professional ones that play out of enjoyment) are freed from any form of taxation, no matter the type of gambling they practice. So, in Canada, you can enjoy online slots, table games, Live Casino games, bingo and lottery games, as well as place a bet on your favourite sports event, without having to think about how much of your winnings you need to return to the state of Canada!

The mere concept of not taxing money acquired from gambling is older than Canada as a country itself. This concept started in England and declares that one should pay taxes only on two occasions: when gambling is treated as a business or as a primary source of income in general. That’s why prize money gathered from all sorts of casino games, lottery games, sports betting events, and other events are being taxed only in certain specific cases.

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Will My Gambling Winnings Be Taxed?

It depends on the specificity of the situation, but in the majority of cases, you will not be obliged to pay taxes on any money you won from any form of gambling.

Unless you possess characteristics of a professional gambler, which are clearly defined in the Canadian Income Tax Act, you will not be obliged to file your online gambling winnings and taxes. When determining whether a person is playing professionally and making a living out of it or not, which directly affects should one pay gambling taxes or not, the Canadian government considers several key factors.

It’s also important to differentiate gambling tax laws from general Canadian Criminal Code laws, which regulate all kinds of things, among them gambling as an activity as well. All offences related to gambling in Canada, as well as their regulations can be found in the 7th part of the Criminal Code, named “Disorderly Houses, Gaming and Betting”.

Professional VS Non-Professional Players

Professional Gambler

The Canadian government tries to focus more on the mere way of making gambling profits, rather than on just making them. Some of the things according to which the Canadian government can classify you as a pro. However, consider whether you run your gambling operation like it is some kind of a business and/or you utilize some specifically designed program/application or skill/expertise to make a consistent profit. They will also look into the fact whether gambling represents your main way of making money or is it just an additional profit source, next to your primary job/profession. The skill/expertise part is the main reason why poker and pool players are more frequently classified as professionals compared to people who choose casino slots, lotteries, and sports betting, which are considered as “pure games of luck”.

And when it comes to the part about income sources, it is more likely that you will be recognized as a professional gambler by the Canadian law if you don’t have another profession/career/income source next to gambling.

Non-Professional Gamblers

Gambling Taxation in Canada
Gambling Taxation in Canada – Illustration

Non-professional players are never obliged to pay taxes on money won in inline gambling activities, regardless of how frequent they play or how big is the prize amount. Non-professionals represent a very diverse group of people. However, when it comes to gambling taxation in Canada, only one thing really matters: if you don’t make a living out of online gambling, there are no taxes for you! On the other hand, non-professional players have to deal with some handicaps too. For instance, deducting gambling losses from your income in Canada is possible only if you are a professional player.

The truth is, in Canada, the law is reluctant to classify people as professionals unless it’s a really clear-cut case. In short, most of the time, Canadian players aren’t obliged to pay taxes on their gambling winnings. And under gambling, the law recognizes the following activities:

  • Online casino games
  • Land-based casino games
  • Live Casino games
  • Scratch Cards & Win Tickets
  • Lotteries & Bingo
  • Sports betting in any form

Gambling & Income Taxes

Like explained above, if you don’t make a living out of gambling activities, and therefore don’t represent a “professional gambler” in the eyes of the Canadian Revenue Agency, you are totally liberated from any income taxes on your gambling winnings, regardless of the type of the game you play or the contest you participate in.

If CRA does consider you to be a professional gambler, your winnings are being taken as your primary source of income, and therefore will be taxed and treated as any other regular job. Income tax brackets are being calculated from your net income.

For example:

You Earn $45,000 Tax Bracket 15% You Keep $38,250

Below are displayed basic income tax brackets which are valid for everyone in Canada, among them professional gamblers:

Income Tax % Income Range
15% $46,605
20.5% $46,603
26% $51,281
29% $61,353
33% $205,842+

Remember that this income tax calculation doesn’t apply to casual gambling wins, only to the “main income” professionals.

Land-Based VS Online Gambling Taxation

The Canadian Income Tax Act doesn’t have clear boundaries between online and offline gambling, and it would be totally correct to apply the same rules to both. And the rules follow the principle that a non-professional player, which means the one with another, the primary source of income is not obliged to pay taxes on money gained out of it. On the other hand, professional players must do so, but also enjoy some privileges, such as loss deduction.

Do the Rules Differ by Region, City or Province?

Different Canadian provinces have different gambling laws that regulate various gambling-related issues, such as, for instance, casino licensing. However, when it comes to paying taxes on gambling winnings, the unified rules apply, no matter in which exact part of Canada you live.

However, the main question still remains whether you are making a living out of gambling or not. Suppose you have no other job, and you’re using some skill/expertise to achieve consistent winning. In that case, chances are you will be labelled as a professional gambler, which brings along the obligation of paying taxes on gambling revenues.

Gambling in a Different Country

For instance, if you’re a Canadian resident (citizen) eager to gamble in the United States, then it’s really essential to grasp the American rules around gambling taxes. That’s mostly because of the fact that you may be subjected to the taxation of 30% on your winnings! However, there is a way of recovering some of that money:

  • If you have some gambling losses in the US that will offset all or some of your winnings.
  • If such winnings are achieved by playing Blackjack, Baccarat, Roulette, Craps or Big-6 Wheel.

Such rules are based on a special CA-US tax treaty, which gives the power to the American IRS to tax Canadian residents who win money by gambling in the United States of America. But, as mentioned above, you will be able to get some of that 30% tax money back, for example, if you’re able to prove gambling losses/expenses. The bigger the losses you can prove, the more of the tax money will be returned to you. To do so, you will first need to apply for a US tax number and then complete the necessary forms to get your money back.

The same principle, more or less, applies to all other foreign countries. Each of them follows a special set of gambling laws, which needs to be overviewed before you start your gambling activities beyond the Canadian borders.