- »Canada Revenue Agency Pursues Poker Pro Taxes
Canada Revenue Agency Pursues Poker Pro Taxes
Canadian poker players benefit from their winnings more than in many other countries because that money is not taxable.
However, when a person’s main livelihood is poker – poker pros, one might say – they must pay taxes. On that basis, the Canada Revenue Agency (CRA) is investigating more than 12 poker players who may have not paid applicable taxes on winnings between 2014 and 2016.
Le Journal de Montreal’s Investigation Bureau discovered the CRA actions and obtained corroborating evidence from some of the parties involved.
The Canadian tax authority is targeting “more than a dozen players” who won large sums of money in poker between 2014 and 2016. And evidently, the CRA is not only looking on websites like the Hendon Mob Poker Database for live tournament wins, they are also tracking online poker winnings from sites like PokerStars and PartyPoker.
The players in the CRA’s sights have also stood out due to leading lifestyles that include rather extravagant expenses. The article cites Pascal Lefrancois’ Audi S5 car rental contract that costs more than $1K per month.
Lefrancois was one of the players named in Le Journal de Montreal’s reporting. Others were Sammy Lafleur, Marc-Etienne McLaughlin, Francois Billard, and Vincent Jacques. No other names have yet been released.
Billard’s attorney verified that the CRA is “investigating whether the way the defendant operates his poker makes his earnings taxable.”
The CRA asked Lefrancois for a copy of his car rental contract.
However, the poker players have not submitted requested documents. CRA investigators have reportedly been requesting documents since 2017 in the form of online poker transaction histories, player-to-player transfers, and deposits and withdrawals from online poker accounts and bank accounts.
Without cooperation, the CRA went to the courts last spring to force the players to produce the documents, but no judge ruled on the case yet.
Lefrancois’ lawyer contended nearly two years ago that “several judgments rendered by the courts confirm that gaming winnings are not taxable.”
CRA spokesman told Le Journal de Montreal that they will not stop trying to obtain documents and pursue taxes. “The Agency will continue to focus on this sector as we continue to see an increased number of gambling-related cases and high-risk files,” said Frederick Fink.
The five listed players do have significant winnings listed by Hendon Mob during the 2014-2016 time period in question. Those winnings are as follows:
- Francois Billard of Rosemere ($533,165 in 2014; $57,746 in 2015; $283,792 in 2016)
- Vincent Jacques of Quebec ($256,273 in 2014)
- Sammy Lafleur of Shawinigan ($14,326 in 2015)
- Pascal Lefrancois of Rosemere ($566,824 in 2014; $127,278 in 2015; $134,952 in 2016)
- Marc-Etienne McLaughlin of Montreal ($125,253 in 2014; $376,434 in 2015; $84,850 in 2016)
Online poker winnings are not as easily calculated, as many have been erased or are not listed by the players’ given names.
Wording of Law is Important
Canadian law is fairly clear that income from games of chance is not taxable. In most cases, games of chance include lottery tickets, casino games, and poker.
However, this changes when a person earns a living from a game. According to the CRA, it judges the taxability of earnings based on the following:
- the degree of organization of activities carried out by the taxpayer
- the existence of special knowledge or privileged information that allows the taxpayer to reduce the element of luck
- the taxpayer’s intention to gamble for the simple pleasure of the intention to gamble for profit in order to earn a living
- the extent of the taxpayer’s gambling activities, including the number and frequency of bets.
The CRA addresses such income in Series 3, Folio 9, Chapter 1, though poker is never mentioned. And the statute even notes that the law is a bit ambiguous.
“An individual’s gambling activities may result in taxable business income or a business loss. This will be the case if the gambling activities constitute a source of income (that is, carrying on the business of gambling). Determining the commerciality of gambling can be challenging.”
It goes on to note that lotteries are games of pure chance and do not constitute taxable income. It then notes that there are exceptional cases in which gambling activities have been found to be taxable. The case of Luprypa v. The Queen in 1997 is referenced to give an example of a pool player making money via hustling other players.
The problem, then, lies in the ability for the CRA to interpret the poker players’ activities based on any available evidence. But the players seem to have retained attorneys to fight the cause for turning over paperwork that could be used as evidence in the first place. And they seem prepared to go to court to win that battle.