Gaming and sports betting have always been a popular pastime for many. Thanks to the advancements in technology and the evolution of software developers, players now have more exciting ways to gamble and more opportunities to win.
The big question is — what happens with taxes on these gambling winnings? In this blog, we’re going to answer exactly that and explain what the tax ramifications are for players in Canada.
Learn About Gambling Tax in Canada 2024 and How it Affects Winnings
The short answer is no, but that’s not a fully unequivocal ‘no’. In most cases, gambling winnings are not taxable in Canada unless you’re a professional.
If betting on sports or online poker or anything casino gaming related is deemed to be your profession, then yes, you have to pay tax on that, as you would a salary. That’s due to you treating gambling as a business and making a steady income from it, then you do have to pay taxes.
If gaming or gambling is merely a pastime, something you do on the side, even if you do it regularly – then you don’t have to pay tax on the winnings. You don’t have to worry about the Canadian Revenue Agency coming for your winnings from casinos, sports, or the lottery.
How are Canadians taxed on gambling winnings?
Canadian gambling tax varies and it depends on the scenario. In general, gambling winnings in Canada are not taxable. Many people view this as a fair system, after all, playing and winning in casino games or sports is challenging and does require some skill.
In other countries, like the United States, the government does tax gambling winnings. Some might say that’s unfair because they don’t let you write off your losses. In some cases, players lose more than they win but the government will still tax these players regardless.
In Canada, the government does not always get involved in taxation, it depends on the case. Let’s unpack the scenarios where you would get taxed and others where you won’t.
Discover the tax-free advantage of Canadian gambling laws
You won’t get taxed as long as this is not your primary business or a form of business for you. If you happen to win a few thousand playing online blackjack or even win six figures playing a progressive jackpot slot, you won’t be required to pay any taxes. It’s also worth noting that you are not compelled to declare these winnings as anything on your taxes.
Since gambling winnings are not taxed by the provincial or federal government, there is no need to track gambling losses. Losses would only be useful to write off from winnings if there was tax on the winnings (as in the United States).
What you need to know: paying taxes on Canadian lottery jackpots
Lottery winnings are not taxed in Canada, which is one reason why it’s way better to win a big jackpot in Canada versus the United States. Just keep in mind when spending your money, that there may be certain things that you do or buy that could be taxed.
If you go and spend all of your winnings, then you won’t have to pay any tax on the winnings. However, let’s say you take the winnings and park them in a high-interest savings account at 5%. The 5% that you earn each year, you’ll definitely have to pay tax on that money.
That is standard though, whether your money comes from gambling winnings or anything else. If you invest your money in Canada and make money doing so, you will have to pay tax on that money.
Pay your fair share: Canadian gambling laws and taxation explained
You would be required to pay tax on your gambling winnings if you treat it as a business. For example, if you are a poker player, and you make a living from your winnings at tournaments or cash games, that would be considered taxable.
If you spend your workday betting on sports with a very-disciplined system that then serves as your primary income, you would then be required to pay gambling winnings tax in Canada. Only professional players need to pay tax on winnings and can therefore write off gambling losses. Casual and recreational players don’t need to bother with either.
If a Canadian wins money in Vegas, they’re going to have to pay taxes to Uncle Sam. In the United States, you’re looking at about 50% tax on winnings. If you win anything over $1,200, the place where you win will withhold 30% of your profits for the government. Later, when you file your taxes, you can get that money back or top up to pay whatever else is owed.
What Do You Need to Declare for Gambling Taxes in Canada?
You need to declare any winnings if this is a primary source of income for you. If you’re a professional sports bettor or professional poker player, you’re required to track all of your entry fees, deposits, gains, profits, and more. Keep in mind that you would be able to write off certain things from your winnings. This includes any losses, money spent on your business, and so on.
In that case, your winnings will be deemed an income. If that’s your situation, then you are permitted to write off gambling losses. To prove gambling losses, you have to keep meticulous track of your deposits, withdrawals, balances, and gaming.
For example, if you deposit $1,000 into an online casino, you have to show that you unequivocally lost this money if you want to write it off as a loss. That might include showing the balance after, with the actual gaming history (for example, five spins of $200 on roulette that produced five losses). If you don’t present detailed notes, your losses might not be accepted by the government, and then you’d still have to pay taxes on the full amount of the winnings.
For example, let’s say you are a professional who’s cracked the code and consistently wins over time. If you are playing at a land-based casino, you could write off car expenses to and from the casino, a portion of your car insurance, and so on.
If it’s online, you could write off your internet bill, home office, and more. Of course, every situation is different and it’s best to consult with an accountant but ordinarily, if your income is taxable, you can write off certain things off that income.
Overview: Canadian Casinos Where You Don’t Pay Taxes
|Number of casinos where you don’t pay taxes
|Number of crypto-friendly casinos
|Number of sports betting casinos
|Most popular casino
|Top online games
|Slots, blackjack, roulette, baccarat, poker
Canadian Gambling Tax: A Recap
The short and long of it is that if you’re just a casual player who happens to win, you never have to worry about your winnings being taxed. However, if you are a professional player who makes a steady income from gaming – be it casino, poker, or sports – then you will have to pay taxes. No one enjoys paying taxes, it’s just one of those things you can’t escape in life. The good news? The gambling taxes you pay are the same income taxes that everyone else has to pay. This will be deemed your income, so that’s why you’re essentially paying income tax.
- Gambling & Taxation – Enjoy tax-free winnings if you’re a gambler in Canada.
- Tax-Exemption Status – Read up on Canadian gambling and the tax-exemption status.
- Canada Revenue Agency – If you’re a pro player, be sure to brush up on Canada’s income tax laws.