Does one have to pay income taxes at online casinos in Canada?
Taxes on winnings at online casinos in Canada
Canadians hate taxes. They see the various payments as a looming threat. This also applies to playing at the website about highest payout online casinos, where players are interested in the question: do I have to pay taxes after winning large sums of money? We want to immediately reassure fans of slot machines or table games. No gambler should pay tax on winnings in Canada. No one will visit your house demanding to pay a part of the money won on the site on the Internet. In this article, we will talk in more detail about the taxation of winnings at online casinos.
Do I have to pay income tax at an online casino in Canada?
Imagine that you have filled in the maximum number of cells in the lottery ticket and won an impressive prize. The question immediately arises in your mind: should you pay a part of these winnings as profit? This is where the principle of calculation comes into play, which depends on amateur or professional gambling for real money.
Amateurs in the gambling industry will not pay any commission when winning at an online casino. And the amount of money received does not matter. It also doesn’t matter what game you were able to earn a thousand or a million Canadian dollars from. These winnings are not taxable.
Real professionals are another category of gamblers. They treat gambling as a business. Therefore, they must declare their income and pay taxes on the money they win in casinos. However, professional players also write off lost money from gambling and other expenses related to gambling. There is a T5 receipt for this, which must be filled out and submitted. If a professional gambler fails to do this, he could receive a significant fine. But in reality, the Canada Revenue Agency very rarely checks professional gamblers.
But here we are talking about the attitude towards professionals and amateurs of gambling in Canada. In other countries, professional players or amateurs from our country, betting real money in online casinos with foreign registration, pay taxes according to the laws of jurisdictions. That is, taxes depend solely on the laws of the country where the gambling club is registered.
When does the Canada Revenue Agency define you as a professional gambler?
There is no clear indication in the Gambling Tax Act when a player begins to be considered a professional gambler. However, in practice, there are several cases where tax inspectors have treated an online casino user as a professional player. But here, there is a condition where the player has a positive balance and a constant profit for several years.
Very often, connoisseurs of gambling entertainment try to show themselves as professional players in order to write off the money lost on the game. But the tax authorities are unhappy about this and try to ignore this kind of statement.
Do I have to pay taxes for losses in online casinos in Canada?
This also depends on the status of the player. If the user is defined as a gambling fan, he is exempt from paying taxes on losses. This is a fair decision by the authorities of our country because, in the absence of income tax, it would be strange to charge fees on losses in gambling entertainment.
As we have already determined, professional gamblers will have to declare their income. But this status allows them to write off the money they lose. This is also the right approach because the legislation obliges them to pay taxes on profits in online casinos. If we are talking about tournaments and games in land-based casinos, then travel expenses, travel, and tournament fees also fall under the write-off.
Is there a difference in income taxes at online casinos in Canada in different regions?
Each province has the right to set its own rules for playing for real money. But the tax system and payout rules for winnings are identical across Canada. In any province or territory, professionals must pay taxes on winnings. On the other hand, Amateurs are completely exempt from paying a commission on profits.
We would like to remind you right away that this guide is for informational purposes only and is not a rule for the taxation of gambling in our country. We do not give legal advice or financial advice. The material is written to explain the system of taxes on winnings, according to our experts. Still, it does not guarantee the accuracy of the data in the jurisdiction of your country or province in Canada.
So before you decide to gamble for real money, get professional advice and register on the casino site after the age of 21 years. Play responsibly and be aware of the possibility of losing impressive sums of money. To avoid this, do not sit down to play when you are drunk or in a bad mood.
Roberto Villa is the CEO, Founder, Executive Writer, Senior Editor of FightBook MMA. Has a passion for Combat Sports and also a podcast host for Sitting Ringside. He’s also a former MMA fighter and Kickboxer.