Can Casino Winnings and Losses Be Taxed in Canada?

April, 06, 2022 5 months ago

Casino games offer the perfect pastime for many people worldwide, and Canadian punters aren't left behind. The country is home to land-based casinos, and players have unlimited options with online gambling destinations. No law prohibits gambling on offshore sites, meaning players can join any casino they like. Casino winnings are generally not taxed in Canada, but specific situations can result in taxation and possible deductions.

Who Gets Taxed at Canadian Casinos?

The Canadian Revenue Agency collects gambling taxes from the casino operators, not the players. You don't have to report your gambling winnings in your annual tax return unless it's your sole source of income. Reputable online casinos offer games of luck and attract the full spectrum of players, from those who bet for fun to gamblers acting on pure impulse. Funds won or lost while pursuing casino games for recreation aren't subject to taxes. Whether you win a few dollars on poker or hundreds of thousands in a lottery or progressive jackpot, you don’t need to pay any tax. The revenue agency will collect their tax from income generated by the casino operator using the venture to make a profit. Players are only taxed if they are professional gamblers and rely solely on gambling to earn income or report casino winnings in their annual tax returns.

Is Your Salary a Factor?

Salary from employment, career, and other income are vital factors when the revenue agency considers taxing casino winnings. Players with a salary and career generally don't need to pay tax on their casino cashouts. However, those without a salary, employment, or other trade may be relying on gambling as the sole source of income. If that's the case, the revenue agency will be keen to tax casino winnings and considers the person a professional gambler/player.

Professional versus Recreational Players

A professional player is anyone who relies on gambling to earn income. Professional gamblers use unique expert skills, betting strategies, and systematic approaches to consistently win real cash and profit from their sessions. They treat gambling as a business and a way to earn a living and use experience, skills, and proven profitable techniques. In Canada, the definition of a professional player is described in the Income Tax Act. Pool and poker players can easily fall under the professional category. However, the CRA will likely consider you a professional player if you have no job or career and consistently earn income from casino indulgences. The opposite of a professional player is a recreational player. As the name suggests, recreational players enjoy fun games and have other sources of income, like employment, careers, and businesses. Recreational players in Canada don't pay taxes on gambling winnings.

Can My Winnings Be Taxed?

Your gambling profits won't be taxed unless you are a professional player or have voluntarily chosen to report them on your income tax. The Canada Revenue Agency doesn't impose any taxes on recreational players because they don't see the rewards as part of earned income. However, you'll be taxed if you treat gambling as a business to generate profit and consistently leverage sophisticated tools and strategies. The agency will also tax casino winnings issued to recreational players if the funds are recorded as part of the income for the year when submitting annual income tax slips. You can check out the latest law on gambling profits taxes to identify scenarios when CRA can tax your casino winnings.

Can My Losses Be Taxed?

If you lose money playing casino games, the losses won't be taxed from your income tax return, and you're under no obligation to report them. However, the loss is a win for the casino, and the stake will count towards the income/profit generated by the business. CRA will tax that amount from the casino’s end when the collecting gambling operator taxes. Professional players or those who record gambling winnings on their income tax return can get deductions for their gambling losses, but that’s as far as it goes. The revenue agency doesn’t tax player losses.

There are many different factors to take into account when thinking about how your gameplay will impact your taxes. We recommend that you consult an accountant or financial advisor for your specific situation. It is always best to talk to an expert, especially when it comes to your personal financial matters.