Are Winnings from Online Gambling in Canada Taxable?
Afraid to dip into online gambling in Canada? Worried that you’ll lose some of your winnings to taxes and other government deductions?
In countries like the United States, online gambling winnings fall to a standard 25% tax rate. Many other countries now tax online gambling as well. People relocating to Canada or Canadians starting out on this trend might fear if this is the same case in the country.
The answer isn’t as black and white as it is in those countries. Read on and find out.
Gambling Online in Canada: Is It Legal?
With how it goes in Canada, gambling has been a grey area in terms of legislation and law. Looking back to the years between 1892 and 1969, the country never intended to have gambling in the first place. During this time, however, you can gamble on horse racing, charitable lotteries, and raffles.
However, that changed at around 1969 as the decision from the federal government allowed local provinces to hold their own lotteries. This was a means to gain revenue and funding for local projects.
In 1985, the Canadian government decided to assign full gambling control to the local provinces. This changed the scenario completely as gambling laws are now based on the jurisdiction of each province. Unfortunately, there were no changes to the federal Criminal Code, adding confusion to the matter.
The Criminal Code states that it is illegal to be in a betting house (let alone, to run one). However, this does not apply to online casinos. This grey area is an interesting point, given that so far there is no action done about this. Another thought is that there is no specific wording as to whether or not it is illegal.
So, in this case, Canadian gambling is legal, even online gambling. Just be sure to practice safe online gambling if you do so.
Now, for the bigger question at hand.
Gambling Online in Canada: Are Winnings Taxable?
At the end of the day, are gambling winnings taxable in Canada? No.
The answer to this question may not be as simple as it appears due to the confusion made by some laws and the ever-changing political environment. However, the general direction of this is “No”, gambling winnings are generally not taxable. It is an interesting point to raise but let’s break down into detail as to how this is possible.
Horse Racing, Sporting Bets, and Lotteries
Canadians do not get taxed on Horse Racing, Sporting Bets, Lotteries, Online Casinos and any other games of chance. Gambling, in itself, is not even considered a business and most Canadians do not make a living out of the winnings they gain in these games of chance.
With that said, winnings from these games are not taxable. The reason behind this is that these are not steady sources of income. However, if there is an added interest on top of your winnings, that is taxable and will need you to file a T5 form. You’ll incur fines otherwise when caught not paying taxes on those interests.
In Canada, there are numerous sites offering Poker as the game of choice. These sites are not hosted within Canada, other than those hosted on Indian servers. But with that said, there have been no laws prohibiting Canadian players from gambling on these sites.
Winnings from traditional Canadian online gambling games are not taxable, given that you don’t make a living out of them. This is the same premise that runs with the other games of chance and the winnings you earn from them.
Should you be a professional poker player, however, the scenario changes for you. Based on the skill of play, payout, and frequency in playing, expect to get taxed in this.
What Makes This Possible?
When you look at it, this is possible due to the Canadian Income Tax Act. The ruling in this states that casino winnings (online and offline) are not taxable. This knowledge should make it easy for you to enjoy your sessions, assured that your winnings come rolling without any deductions.
In addition, there is the Canada Revenue Agency’s position on this matter. Under their ruling, your winnings should not incur any taxable deductions. But in the case of professional poker players and the like, they will get taxed.
Advantages of Tax-Free Gambling in Canada
There is a great advantage to gambling without getting taxed off of your winnings. The clear picture is in the fact that you receive your winnings in full, without any form of deductions. This guarantees that sense of complete happiness and accomplishment that you receive your reward in full. With the laws in place in Canada, this is a guaranteed experience.
Players from other countries would have to give up huge percentages of what they gained to the government. In the US, citizens have to pay almost half of their winnings as taxes. With this knowledge, victory tasted even sweeter.
One of the main advantages here is that you get to haul in more cash to continue gambling. Luck comes in three’s, they say, and once you start winning you want to have more money to bet on. If you had to pay out gambling taxes, this lowers the amount you can put back in for the next game.
Feeling Lucky Yet? Place Your Bets Now!
In general, gambling in Canada, especially online, can ensure that you enjoy the fruits of your luck as you play. You can easily reap the benefits of playing leisurely as you place your bets and get the winnings without any cuts from it.
Speaking of games, you can get started with playing right now. We have a number of games to choose from to place your bets and up the ante. You’ll never know when you’ll hit that jackpot and get it in full.
Hoping to learn more about Canada’s best online gambling trade? Visit us today and read more of our guides, like this one tackling the 5 slot machine myths that aren’t true.