Updated: December 22, 2023
If you are a fan of gambling, you would think that Las Vegas is the best place for you. Actually, this is not true. The best option for your gambling soul is Canada! And now you are asking why. The answer is simple – you won’t pay an income tax on your winnings. You will be surprised by the fact that this law is pretty old. It showed up in England where citizens did not need to pay Gambling Winnings Tax Canada when they make a living from the casinos or it is part of their business.
Paragraph 40(2)(f) from the Income Tax Act says that you are not obliged to state your gambling winnings when you file your taxes unless you are considered a professional gambler. So, if you are a for-fun-gambler and you are asking if gambling income is taxable in Canada, the answer is no.
Do not forget that gambling tax laws differ from the Criminal Code laws for gambling in Canada, be careful.
For-fun gamblers do not have to pay taxes on lottery winnings Canada, scratch or win tickets, online casino betting, poker, casino games or sports betting.
It does not matter how much you have on when we are talking about gambling winnings tax Canada. It is important for the law whether you are a professional gambler or for a fun player since if you make a living from your betting activities, you are obliged to pay taxes like the rest of the citizens.
For instance, there is no Gambling Winnings Tax on lottery winnings in Canada but winners receive millions of dollars and do not pay a cent. However, they are just-for-fun players.
As previously stated, if you do not make a living from gambling winnings and you are not classified as a professional gambler by the Canadian Revenue Agency, you do not pay Gambling Winnings Tax and they are not considered as income tax in spite of the game type or contest you participate in.
If CRA claims that you are a professional gambler, the winnings you have received are believed to be a source of income. So, those winnings are subject to the same taxation regulations as the rest of the usual jobs in the world.
An advantage could be that if your business is part of the gambling industry, you are allowed to subtract losses and expenses from your business just like other self-employed or all of the people that have their own business. The so-called income tax brackets are referred to as your income net, so ensure that subtracting them is allowed.
For instance:
| You earn | 45,000 CAD |
| Tax Bracket | 15% |
| You Keep | 38,250 CAD |
You can look at this table for the regular tax brackets that are for everyone, as well as professional gamblers:
| Income tax percentage 15% | Income range 46,605 CAD |
| Income tax percentage 20.5% | Income range 46,603 CAD |
| Income tax percentage 26% | Income range 51,281 CAD |
| Income tax percentage 29% | Income range 61,353 CAD |
| Income tax percentage 33% | Income range 205,842 CAD and more |
As we said, if you are a for-fun gambler, you are not obliged to pay any gambling winnings tax in Canada.
Casino winnings are not taxable in Canada unless you are a pro. The Income Tax Act does not differentiate between online and offline gambling, so gamble tax laws apply to both ways.
As previously stated, one of the categories of online gambling that is most often ranked as a professional activity is online poker. The reason is that poker gamblers usually have skills to win money and the law thinks that they do this for a living.
Of course, the different provinces have different laws to maintain online wagering and make sure everything is safe and secure but when it comes to gambling tax on winnings, the rules you have read by now are applied anywhere in Canada.
The only important thing is whether you are a professional gambler or not. If this is your only source of income, skill is needed to receive winnings (not luck and that is why there are no taxes on lottery winnings), you run a business based on gambling, you are a persistent gambler, then, you are obliged to pay Winnings Taxes. So, if you are wondering if income from casinos is taxable, the answer is no.
This is very important. If you are a Canadian citizen but at the moment you are located in the United States and you are gambling there, you are obliged to pay 30% tax on your wagering winnings. The same thing is applied to other countries and their laws of taxation.
There is a special tax treaty between Canada and the US that includes the IRS taxing Canadians who win money from gambling in the United States. However, if you can prove casino losses or expenses, you can get the gambling tax back. It is important to apply for a US tax number and complete the necessary forms to return your money back.
This guide is made to help you research tax rules that involve winnings on betting in Canada and do not constitute legal or financial advice.
Our team created this for you so you can understand it more easily but it does not guarantee to be accurate in your jurisdiction. Please, look for a piece of professional advice for your specific case before taking any action.