In Canada, it is provincial authorities that regulate online gambling within their jurisdictions. Gambling laws vary between different provinces. Some provinces have more elaborate laws than others; online casino Ontario laws are the most elaborate.
As more provinces in Canada ramp up the legalization and regulation of online gambling, there is one question in many players’ minds: are gambling winnings taxable? The answer to this question depends on various factors. It mostly comes down to your location and the nature of your gambling activities. Here is a quick overview of provincial gambling tax rules across different Canadian provinces.
Are You a Casual or Professional Gambler?
The nature of your gambling activities is one of the factors that determine whether your winnings are taxable. The question is whether gambling is a casual or professional activity. In other words, do you depend on your gambling winnings for your livelihood?
Federal and provincial gambling tax rules categorize gambling activities into two types:
- Casual Gambling: Playing casino games for fun, usually occasionally; not to win enough money for your upkeep.
- Professional Gambling: Playing casino games regularly as a business activity with the goal of making considerable profits.
There are many easily notable characteristics that differentiate casual and professional gamblers. As such, there are certain CRA gambling winnings criteria that authorities use to find out whether you are gambling professionally or casually. For example, authorities consider how often you gamble and the amount of time you spend playing casino games. It also reviews your finances to see whether your livelihood depends on your winnings.
No Province Taxes Winnings from Casual Gambling
You don’t need to worry about winnings taxes if you are a casual gambler, regardless of your location. Provincial gambling tax rules across all provinces exempt casual gambling winnings from taxation.
However, there is one exception for Canadians living in Quebec. According to the province’s laws, all lottery winnings about $1,200 are subject to a withholding tax. The exact taxation rate depends on the amount you win. Notably, this rule applies only to lottery winnings; winnings from ordinary casino games are not taxable.
All Provinces Tax Winnings from Professional Gambling
If you are a professional gambler, then your winnings are subject to taxation across all provinces. All provinces require professional players to report their income (gambling winnings) and pay taxes. Tax rates vary between different provinces. Besides provincial taxes, your winnings are also subject to federal taxation. When combined, the tax rates average about 50% across all provinces; they can be slightly higher or lower.
Naturally, many professional players would prefer not to pay taxes on their winnings. However, it is worth noting that the CRA and provincial authorities have various means of identifying professional gamblers. Besides, taxes from gambling go a long way. Many provinces use the taxes to fund crucial projects like schooling and healthcare.
Does the Amount Matter?
Professional gamblers usually rake in bigger wins than casual gamblers. As a result, many casual gamblers may be confused when they land big winnings. However, that doesn’t matter. Provincial gambling tax rules don’t factor in the size of your winnings when determining whether you are a professional or casual player. Anyone can get lucky and win big, even casual gamblers; similarly, professional gamblers get unlucky all the time.
There are Exceptions for Non-Residents in Ontario
Everyone is welcome to enjoy online gambling while in Ontario. However, non-residents enjoy one less privilege than residents: winnings over a certain amount are taxable. Specifically, the Ontario Lottery and Gaming Corporation (OLGC) places a 30% withholding tax on all winnings over $10,000.
Non-residents, in this case, only refers to foreigners. As such, Canadians from other provinces aren’t subject to the withholding tax. Notably, none of the other provinces have this requirement.
What Does the Future Hold?
It’s been barely five years since the first Canadian province legalized online gambling. As such, tax laws in Canadian slots and other casino games are likely to keep evolving and changing for the near future. This means that tax rules could change as laws evolve, especially in provinces where the gambling laws are vague or still in their infancy.
It is highly unlikely that provinces could start taxing winnings from casual gambling. However, tax rates on winnings from professional gambling. As such, it would be prudent for professional gamblers to keep up with new changes and developments.
Enjoy Your Winnings!
Provincial gambling tax rules are clear. Casual gamblers need not worry about taxes on their winnings. As for professional players, winnings taxation is no different from income taxation, and rates vary between different provinces. Either way, everyone should enjoy their winnings, whether or not they are subject to taxation.
