Are poker earnings taxable?

northernlimit

Ok, I know it sounds silly, since I doubt anyone actually declares poker income, but here's the thing...if I'm are playing on-line I'm worried I may be charged for tax evasion on gross winnings.

As far as I know, (which isn't far so someone please clarify) poker playing in a Canadian casino is tax free as the casinos are government owned, so (like lotteries) earnings are not taxed (?). A player in the US can declare themselves a professional and deduct playing expenses against revenue earned. This is crucial for players (like me) who play a lot, but are not very good and so typically lose as much as they earn, but with large gross incomes, but small net balances (i.e. large wins and equally large losses).

Playing on-line you may think you are anonymous, but there is nothing to stop the government from subpoenaing player records from on-line sites and charging players with tax evasion for gross income won. If a player hasn't declared themselves a professional their gross wins (regardless of losses) are legally subject to tax as income(?).

Does anyone know if these comments are true and what the tax rules are in Canada?

- Northernlimit

kk_rush

Assuming that no one here knows otherwise, I would suggest talking to a tax professional who would be familiar with such laws.

I remember a similar discussion on another forum where someone mentioned that the law could imply that you have to pay taxes if your playing indicates "reasonable expectation of profit"....but that's pretty vague language.

g2

kk_rush wrote: »

Assuming that no one here knows otherwise

The answer is no, they are not taxable in Canada.

/g2

Kristy

Great question! I'm also wondering..is there a situation under which one might fold AA preflop and be mathmatically correct or under which circumstances and at which venues it is legal to play public poker?

cadillac

g2 wrote: »

The answer is no, they are not taxable in Canada.

/g2

If you declare yourself a professional poker player in Canada your winnings are tax deductible.

If you are recreational then it is not taxable.

northernlimit

Thanks for the great response.

PokerKai

Unfortunately your not going to receive a very clear cut answer to this question because there really is no clear cut answer. As it stands right now, poker falls into a sort of grey area and revenue Canada has basically reserved the right to judge whether people pay taxes on their winnings on a case by case basis.

Here is what most people consider the part of the tax code that is most relevant when it comes to poker...

http://www.cra-arc.gc.ca/E/pub/tp/it334r2/it334r2-e.html

Here is probably the most recent case of Revenue Canada going after poker winnings. Its about a guy who incurred significant losses operating his non-poker related business but because of his poker play, his networth for the year actually increased and so revenue canada tried to come after those winnings as income.

http://decision.tcc-cci.gc.ca/cgi-bin/sino/disp.pl/en/2003/html/2003tcc707.html?query=gambling&langue=en

Heres another interesting case that just occurred in Nov 2006. Its about two brothers who made millions on sportsbetting.

http://decision.tcc-cci.gc.ca/en/2006/html/2006tcc680.html

The most interesting tidbit where poker players are concerend is the comment the judge makes in his conclusion...

The appellants are not professional gamblers who assess their risks, minimize them and rely on inside information and knowledge and skill. They are not like the racehorse-owner, who has access to the trainers, the horses, the track conditions and other such insider information on which to base his wagers. Nor are they like seasoned card players or pool players who prey on unsuspecting, inexperienced opponents. Rather, they are more accurately described as compulsive gamblers, who are continually trying their luck at a game of chance.