Are you a Canadian gambler looking to understand the tax implications of your winnings? If so, this article is for you. Here, we'll explain how gambling taxes work in Canada and answer some common questions about what you need to know. Let's get started!
- Recreational players don't pay taxes at all
- Professional gamblers are required to pay income tax on their winnings
- You can recoup the gambling tax money you paid in the US
- Canada is in a really good position in terms of gambling.
Are Gambling Winnings Taxable?
Ask yourself: do I make a living from gambling? If the answer is yes, then you must declare your earnings as income and pay taxes on it.
Most Canadians don't gamble for a living, so their winnings are generally considered to be occasional or windfall gains. As such, the vast majority of Canadian gamblers do not need to pay taxes on their winnings. Paragraph 40(2)(f) of the Income Tax Act states that all income from gambling is not taxable if you are not a pro gambler.
Even if you won big and hit a massive jackpot, you still don't have to pay taxes on it. This is true for all forms of gambling, including lottery tickets, slot machines, bingo games, poker tournaments (we will talk more about it later) and casino table games.
Who Actually Pays Gambling Taxes in Canada?
Since recreational gamblers don't have to pay taxes on their winnings, it begs the question: who does? The quick answer is: professional poker players and sport bettors. They are the only ones who need to pay taxes on their gambling winnings.
How many of them are there, you might ask? It is really difficult to say. According to some estimates, there are about 5000-10000 professional poker players in Canada (online + offline), and the number of sport betting pros is likely lower than that.
|Form of Gambling||Tax Status for Recreational Gamblers||Tax Status for Pros|
|Online casino||Non-taxable||Non-taxable (bc there are no ‘casino pros')|
|Land-based casino||Non-taxable||Non-taxable (bc there are no ‘casino pros')|
|Lottery||Non-taxable||Non-taxable (have you ever seen a ‘lottery pro'?!)|
|Scratch cards||Non-taxable||Non-taxable (‘scratch cards pro', come on…)|
|Horse racing||Non-taxable||Non-taxable (no ‘horse racing pros' as well)|
|Bingo||Non-taxable||Non-taxable (bingo can't be played professionally as well)|
Remember: Poker & Sports Betting Are The Only Games You Can Play Professionally
Among all casino games, you can only make a living through poker or sports betting. You can't be a professional roulette or slots player (despite what some people would like to believe) because simply you can't win money in the long run playing these games. House edge and randomness prevent anyone from doing so.
Some casino guides also claim that there are professional players who make money playing blackjack and other games by counting cards, but the truth is that these people are rare exceptions. It is not possible to count cards in online blackjack, and even if you do manage to do it successfully at a live casino, you will get caught and banned forever. Blackjack has an RTP of 99%, so it is not possible to beat the house in a long run.
Not sure what RTP stands for? Feel free to check out our guide to the best payout casinos, where we explain everything in detail.
Taxation For Online & Offline Gambling In Canada
The taxation laws for online and offline gambling in Canada are the same. The Income Tax Act doesn't differentiate between the two and applies to both. So, if you are a professional gambler, you must declare your winnings and pay taxes on them, no matter if they come from Canadian online casinos or land-based ones.
On the other hand, if you play for fun, you don't have to worry about taxation. Even if you manage to win for a few months or years in a row, you still don't need to pay taxes on your winnings as long as you are not a professional gambler.
Professional Gamblers vs Amateur Ones
How to know if you are a professional gambler? The answer is simple: if your main source of income is gambling, then you are considered to be a ‘pro'. That means that even if you work a 9-5 job, but still make more money through gambling than from your job, you are a professional gambler.
Here are some of the criteria that will help you decide if you fit into a ‘pro' category:
- Poker or sports betting is your main source of income
- Consistently win more cash than you lose
- Your bankroll is sufficient for you to be able to gamble professionally
- You regularly compete in live tournaments
- You travel to gamble
- You track your winnings, losses and other gambling-related expenses
- You have a stable playing history
- You gamble more than the average person (200+ hours per month)
Gambling Tax On Lottery Winnings: Yes Or No?
The short answer is: no. Lottery winnings aren't taxable in Canada as well. That includes winnings from lottery tickets, scratch cards, and other types of lotteries. You can play Lotto Max or 649 for fun and not worry about taxation. The CRA (Canada Revenue Agency) does not tax lottery winnings, because it is all about luck and doesn't require any skills.
The same holds true for charitable raffle tickets. If you win a car or a trip, you don't need to worry about taxation. These prizes are considered occasional gifts and not taxable income.
How Much Tax Do Poker Pros Pay In Canada?
Poker pros are subject to income tax, just like any other self-employed professional. That means that they are responsible for paying taxes on their winnings and also deducting certain business expenses related to playing, like entry fees or travel costs.
Take a look at the table below to find out the applicable tax rate for poker pros and other professional gamblers in Canada:
|Income Tax||Income Range|
Claiming Back Your Losses From Vegas Is Possible…
Canadians need to pay a 30% tax for any winnings over $1,200 in the U.S. This tax is automatically deducted at source, but you can claim it back if you file the correct paperwork. It may sound complicated but it is actually quite simple – all you need to do is fill out form 1040NR and file it with the IRS. Doing so will allow you to get a refund of tax withheld from your winnings.
Let's have some example to give you a better idea:
- You are Canadian and you work legally in the US.
- Vegas is known from the biggest payouts and the most fun so you go there to gamble and win $5000 on a slot machine.
- You pay $1500 in taxes ($5000 x 30%) straight away. So you walk out of the casino with $3500.
- Then, you need to apply for an Individual Taxpayer Identification Number.
- All left to do is to file a form 1040NR and get a refund of the taxes you paid. If you get your paperwork done correctly, you can get up to $1500 back in this case.
In order to claim back gambling losses, you must provide proof of them, which can be done by keeping records of your tickets, slips or receipts.
Gambling Tax Canada: Final Thoughts
You may like our authorities or not, but it's hard to argue with the fact that Canadian gamblers are among the luckiest in the world. We don't need to pay taxes on our winnings, making it much easier to enjoy the thrill and excitement of gambling without worrying about taxes. Just cashing out money straight into our pockets. Simple as that. Although there might be some casino withdrawal problems sometimes.
Many people don’t realize just how lucky we are to have such lenient gambling regulations. Unlike other countries, gambling is not illegal in Canada and your winnings are not subject to taxation. And, we can do it all without fear of being arrested or fined.
In general, we think that the Canadian gambling tax law is fair: if you are a pro, pay your taxes; but if you are not, enjoy your luck without having to worry about taxation. After all, this is what gambling is all about!
Want to learn more about casino payment methods that allow you to withdraw without any hassle? We recommend you reading our guide then!
Do I Have To Pay Taxes On My Casino Winnings In Canada?
No, you do not have to pay taxes on your winnings in Canada. There is no tax on gambling winnings in Canada. However, if you are a professional gambler then you will need to pay taxes on your income as per usual self-employment rules.
Is It Possible To Write Off Gambling Losses On My Taxes?
As long as you are a professional gambler, you can write off your gambling losses and claim business expenses on your taxes. However, you need to provide proof of these expenses and losses in order to do so.
Do I Have To Pay Taxes On My Winnings In The US?
Yes, you must pay a 30% tax on all winnings over $1,200 in the US. However, thanks to Canada US tax treaty you can claim this tax back if you file form 1040NR with the IRS.
Last Updated on February 14, 2023 by Dan
- About the Author
- My Latest Posts
Hey, I'm Danny. With seven years as a poker player and 9 in the online casino industry – I’m here to share everything I know about fast-paying casinos. Leeds fan, movie enthusiast and NFT degen.