Gambling Winnings Tax in Canada
Canadian gamblers are often unsure whether or not they have to pay taxes on their gambling winnings. The good news is that recreational gamblers needn't worry about paying additional taxes; however, professional gamblers must be aware of the tax laws surrounding gambling activities.
In this guide, you'll discover the tax rules surrounding gambling profits in Canada, including what makes a gambler professional or not and the gambling tax status for different casino games.
Are Casino Winnings Taxable in Canada?
For casual gamblers, online gambling winnings are not taxable in Canada. However, if you are a professional gambler, then you'll need to pay income tax on gambling profits. Below is an overview of the tax status for gambling activities, depending on whether you're a recreational or a professional gambler.
|Type of gambling||Tax status for recreational gamblers||Tax status for professional gamblers|
|Online casino games||Non-taxable||Taxable|
|Physical casino games||Non-taxable||Taxable|
|E-sports & fantasy sports||Non-taxable||Taxable|
When Are You Classed as a Professional Gambler?
It isn't exactly clear what makes someone a professional gambler in Canada. Generally speaking, actions carried out continuously to make a profit, such as gambling, are considered to be business actions. The Canada Revenue Agency (CRA) considers you a professional gambler if you meet the following criteria:
- You have special knowledge or skills that you apply to your gambling to reduce chance-based outcomes (for example, a professional poker player will use poker strategies.)
- You gamble to earn a livelihood instead of for pleasure.
- You gamble frequently and have proof of making a consistent profit as your primary income source.
- You keep an extensive record of profits, losses, and business expenses.
- Your gambling activity runs like a business (for example, you gamble for several hours per day, each day.)
- You participate in official tournaments both online and offline.
If you're unsure whether or not you are seen as a gambler in the eyes of the CRA, seek advice from a financial advisor or legal professional.
Income Tax and Gambling Winnings
If you're a professional gambler, then you'll pay taxes depending on your gambling profits. Gambling winnings are treated like income tax; after deducting losses and expenses, you'll be left with the amount you must pay tax on.
Below is an overview of how much tax you'll pay depending on how much you earn.
|Income range||Income tax percentage|
|Up to $15,000||Tax-free|
|Between $15,000 and $50,195||15%|
|Between $50,197 and $100,392||20.5%|
|Between $100,392 and $155,625||26%|
|Between $155,625 and $221,708||29%|
Are Lottery Winnings Taxable in Canada?
If you win money in lottery games, you are in luck! Lottery winnings are non-taxable in Canada, meaning you can keep everything you win. However, if you put some of your lottery winnings into a savings account, you'll need to pay tax on any interest you earn since this is considered investment income.
Likewise, if you purchase a house with your lottery winnings and sell this for a profit several years later, you'll need to pay capital gains tax. You can read more about lottery winnings in our guide about what to do if you win the lottery in Canada.
US and Canada Gambling Tax Treaty
Many Canadians cross the US-Canada border to enjoy gambling at physical casinos. However, if you do so, ensure you're fully aware of the different laws. Even if you are a recreational gambler, you'll need to declare your winnings in the US if they are over a certain amount. Here's what you need to be aware of:
- You must follow US tax rules if you win money at a US casino. This means you'll pay a 30% tax on casino winnings over USD$1,200 (including games of chance).
- Canadians can claim a tax refund on US gambling losses. To do this, you'll need to apply for an Individual Taxpayer Identification Number (ITIN) and file a 1040NR form. You'll also need to provide proof of your losses and ensure that your total losses are less than your total winnings.
How to Declare Gambling Winnings on Tax Returns
Professional gamblers must declare their gambling winnings as earning income on their tax return. As a professional gambler, you'll be considered self-employed and must declare casino winnings as business income. Here's an overview of the steps you'll need to take when paying gambling taxes:
- Firstly, you'll need to register with the Canada Revenue Agency as a self-employed person.
- You must keep a record of all your winnings and expenses.
- You'll then need to complete your income and benefit tax return. You can do this online via the CRA website.
- The sections you'll need to ensure you complete in your tax return include lines 13499 to 14300. In these lines, you'll report your gross income, net income (after deducting expenses), and any losses in brackets.
If you are concerned about whether you need to pay taxes on your professional or recreational gambling winnings, then it is a good idea to consult a financial advisor or tax expert. While the CasinoGrizzly team is well-versed in all aspects of Canadian gambling, we aren't qualified to provide financial counsel and can only provide general guidance surrounding gambling laws.
An Overview of Canadian Tax on Gambling Winnings
So, are gambling winnings taxable in Canada? The short answer is yes, but only for professional gamblers. Recreational players needn't worry since all of their casino winnings in Canada will be tax-free unless they earn interest on their profits.
If at any point you begin winning consistently on casino games and want to start gambling full-time, make sure you follow the tax status laws and declare your profits.
FAQ: Canadian Gambling Tax
Are gambling winnings taxable in Canada?
If you're a recreational gambler, your gambling winnings will be tax-free. However, if you're a professional gambler and either a Canadian citizen or full-time resident, you'll need to pay income tax on your earnings.
How much money can you win gambling without paying taxes in Canada?
If you are a recreational gambler, there is no limit to how much money you can win gambling without paying taxes. However, if you are a professional gambler, you will only be entitled to the Basic Personal Amount (BPA) before paying tax. For 2023, the Canadian BPA is CAD$15,000.
Are gambling losses tax deductible in Canada?
Yes, gambling losses are tax deductible. You can include these on your tax form along with your income and expenses to pay less tax.
What happens if a Canadian wins money in Vegas?
If a Canadian citizen wins money in Las Vegas, they will have to pay a 30% tax on their winnings over USD$1,200. However, the US-Canada tax treaty allows Canadians to claim back this tax loss.
What happens if I don't claim my casino winnings on my taxes?
Professional gamblers who don't claim their casino profits on their tax returns could face serious consequences. You'll be made to pay 50% of the unreported profits, and repeated offences could lead to a 10% federal penalty.
Do foreigners pay taxes on gambling winnings in Canada?
No, foreigners in Canada who participate in recreational gambling won't need to pay taxes on their winnings. However, professional gamblers who visit the country for tournaments must report these winnings in their own countries.
Do I have to pay taxes on sports betting winnings?
You only have to pay taxes on sports bets winnings if you are a professional gambler. This includes fantasy sports and e-sports games.
Do I only pay tax on offline gambling winnings?
The income tax act states that all gambling winnings in Canada must be taxed for professional gamblers. This means money will be taxed whether won at an online casino or a physical gambling establishment.
Are gambling tax rules different across Canadian provinces?
No, federal tax rules are the same across all Canadian provinces. However, gambling laws differ in each Canadian province and territory, so you should read up on these before participating in any form of gambling.
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