Many players around the world enjoy online and brick and mortar casinos, and Canadian gamblers are no exception. Canada is home to some of the world’s largest casinos, and online players have an abundance of online gaming options as well. Gambling has long been popular in Canada but new and less restrictive laws have seen online gambling flourish. According to the Safe and Regulated Sports Betting Act passed in August 2021, the single-game sports betting federal ban was lifted. Players are free to play at any casino of their choice with no consequences. Casino winnings and losses are generally not taxed in Canada. There are a few notable exceptions, especially if you are a professional gambler.
Tax implications for Canadian casino players
Except for individual players, the Canadian Revenue Agency has sole authority over all casino operators. If gambling is not their primary source of income, casual and regular casino players are not subject to paying casino taxes in Canada and do not have to report their winnings to the revenue agency. The Canadian gambling scene caters to both casual and professional gamblers who carefully analyze and place their bets from an informed perspective.
Winnings and losses from recreational gambling are not taxed by the Canada Revenue Agency (CRA), whether it is poker, casino, or pool table winnings. The CRA is more interested in gambling enterprises that profit from the venture rather than a random assortment of players who occasionally try their luck at the table. Professional players, on the other hand, must pay taxes on their annual casino winnings.
Gambling is not taxed in Canada because it is not a consistent source of income, thereby negating its viability as an absolute income source for the government. Citizens only gamble occasionally, with only a few professional players relying on gambling as a full-time job. This makes imposing taxes on the individual casino player unfair and it would only serve to dissuade them from such establishments.
Players can enjoy their full winnings from horse racing, lotteries, sports betting, and online casinos without having to worry about the taxman. Taxation is only possible when winnings generate interest, which the player must declare on a T5 form. The interest is fully taxable under the law.
Who is subject to taxation by the Canadian Revenue Agency?
Professional/full-time gamblers are required by law to file annual tax returns with the IRS. Professional blackjack and poker players are considered freelance gamblers under Canadian law, making their business taxable.
Under Canadian law, professional gamblers are defined as individuals who rely solely on gambling for a living. Professional gamblers rarely bet on the spur of the moment, but instead use their unique skill sets, strategies, analysis, and systematic methods to profit from the highly coveted enterprise.
Why are professional gamblers taxed but not recreational players?
To professional players, gambling is a business, and they will go to any length to profit from their casino, poker, and lotto efforts. According to the Income Tax Act, professional gamblers are all unofficially employed gamblers who consistently earn large sums of money from gambling indulgences. Recreational gambling is the polar opposite of this.
As the name implies, recreational gamblers are those who play for fun at the table or through online games. Many of these are professionals with other sources of income who enjoy an evening of poker, or casino at their favorite establishment. Because recreational gambling is tax-free, these players can bet as much as their pockets will allow, without fear of taxation or other legal consequences.
There is a new catch worth sharing with all new players. The Canadian Revenue Agency takes its time assessing and identifying people whose sole source of income is gambling. CRA views gambling as a business that can be profitable for a period of time but can also experience a losing streak. The accumulation of losses makes the business unprofitable, so taxing it makes no sense. Unconditional taxation of all professional players would be disastrous for the country’s gambling industry. This is not a call to stop paying your taxes, but rather an informative piece to help you navigate the online and land-based gambling scenes with ease.
Unless you are a professional gambler, all of your gambling profits are exempted from taxation under the Income Tax Act. Recreational players are not taxed by the Canadian Revenue Agency. The CRA does not benefit from gambling proceeds because players are not required by law to file returns. However, the CRA requires all professional players to file their returns and pay their taxes in accordance with the Income Tax Act.