One of the most pressing issues revolving around any kind of income is the question of taxes. Thus, it is reasonable to expect that many sports bettors would be concerned about their eventual winnings’ taxability.
However, most casual punters in Canada don’t have anything to worry about, as their gambling revenues don’t fall into the category of taxable sources of income.
Do I Have to Pay Taxes on My Winnings?
With certain exceptions, most incomes realized by betting or gambling in Canada are exempt from taxation, according to paragraph 40(2)(f) of the Canadian Income Tax Act. This means that if you like gambling occasionally, you are not obliged to declare your winnings when you file your taxes.
That is in case you are not considered a professional gambler and that betting winnings are not your primary source of income. If they are, then your revenues are likely to be subject to the effective tax laws.
However, we will see that it can be quite challenging to draw the line between recreational and professional gambling.
Who is Considered a Professional Gambler?
Even though most betting incomes are not considered taxable according to Canadian tax laws, there may be cases when players need to give up a share of their winnings. There are several criteria according to which a person can be considered a professional gambler. These include:
- betting is your primary source of income
- running your gambling operations as a business
- having reasonable expectations of profit
- implementing specific strategies and skills to earn a consistent income.
Analyzing each criterion separately, we can see that all of them can easily apply to both recreational and the so-called “professional” bettors. Many players are unemployed, and potential gambling winnings are their sole source of income. Many spend long hours betting and perfecting their skills and strategies, and no one bets with the expectation of losing money.
Thus, it is difficult to label any sports bettor as a professional, particularly if the person also has another primary source of income, as many of us do.
In any case, if you are lucky and skilled enough to be able to make a living solely out of your betting endeavours, it is comforting to know that, as well as being obligated to pay taxes, you are also eligible for tax returns on account of your losses.
Online and Offline Betting
The Tax Act doesn’t make any distinctions between online and offline betting, so the same rules apply to both realms. As we’ve seen, in the great majority of cases, the winnings you procure from betting don’t fall under the tax obligations, so it doesn’t matter whether you prefer a virtual or a brick-and-mortar operator.
Are the Rules Different in Different Parts of Canada?
Different provinces in Canada have distinct regulations regarding the legal status of casinos and betting providers. However, it is essential to note that, when it comes to taxes, the same rules apply to every part of the country.
This is excellent news for many punters who may often be moving, as they don’t have to get familiar with different legislations every time they want to place a bet in another county or province.
What About Betting In Other Countries?
It comes as a relief to learn that most chance winnings are free of legal duties to the Revenue Agency. Still, if you are a Canadian citizen trying your luck in another country, you need to be aware that different rules apply.
So, for example, if you are playing in the United States, your winnings may be deducted by 30% on account of taxes. If you think you may be able to avoid paying these, you should know that taxes are automatically deducted during payout.
However, as a foreign citizen playing in the USA, you have the right to ask for a tax return if you can provide proof of your losses, so make sure to keep track of your expenses.
If you are a Canadian citizen who occasionally dabbles in sports betting and have enjoyed some winnings, you can rest assured that you don’t owe anything to the government. For the CRA to charge you income tax, it must be able to prove that you have been betting professionally, and that is a complicated and rare thing to do.
No matter where you are gambling in Canada and whether you do it online or offline, the same rules apply. Just remember that these may not be in effect outside of the country. Thus, if you’re not playing at home, it would be wise to keep a record of expenses and winnings so you can minimize your losses.
1. Do Canadian citizens have to pay taxes on their betting winnings?
No. Unless they are professional gamblers, the great majority of bettors in Canada don’t have to pay taxes on their winnings.
2. Are the rules different for online and offline betting?
No, taxation rules are the same for online and offline betting.
3. Do the same rules apply to all parts of Canada?
Yes, the Canadian Tax Act applies to all Canadian provinces.
4. Do I have to pay taxes if I bet in other countries?
Yes, you do. However, if you bet in the USA, for example, you are eligible for a tax return.
5. Do I have to pay taxes if I bet on offshore websites?
No. The Canadian Tax Act doesn’t recognize chance winnings as taxable, no matter where they come from.