Betting and Gambling Taxes in Ontario in 2023
Are you wondering if you’ll be taxed on your big winnings at Ontario online casinos? You may just be in luck but make sure you have all the information.
- Current Laws Regarding Gambling Taxes In Ontario
- Ontario’s Online Gambling Legal Framework
- Declaring Your Gambling Winnings
- Professional vs Amateur Gamblers
- Are Gambling Winnings Taxable in Ontario?
- Are Gambling Losses Tax Deductible In Ontario?
- Recap: Ontario Gambling Taxes
Current Laws Regarding Gambling Taxes In Ontario
The law in Canada states that only certain activities and incomes can be taxed. The good news is that activities in legal Ontario online casinos do not fall into those categories, and your winnings are your own. However, there are a few things you need to know, which we’ll cover in this handy guide.
Gambling isn’t taxed as it isn’t deemed a regular income source for most players. Only those who earn money from employment, property or sources that the government has specifically laid out are taxed. If you’re a casual player, there’s a good chance you haven’t turned gambling into a business, so you should be okay.
But what if you did? We’ll cover what professional gamblers can expect later on in this guide. Gambling taxes in Ontario are not complicated, so make sure that you stay in the loop and up to date on the latest laws and developments.
Gambling As A Resident vs Native Ontarian
As an Ontario resident, the same laws apply to those who are natives.
If you live in Ontario and spend any time gambling, your winnings are not taxable.
This is because the law states that only income can be taxed, and gambling is seen as entertainment.
Ontario’s Online Gambling Legal Framework
Online gambling is only just starting to find its feet in Ontario, and taxation is a part of that process. There are many great online casinos to choose from, but that’s not the only form of gambling available. We select new Ontario casinos online periodically, after verifying their iGaming Ontario license status.
Players need to take note of the laws across the board, including Ontario sports betting tax, playing and winning in other parts of the world, and when playing at a land-based casino.
When it comes to taxing winnings, there’s no difference when you’re playing online or at a brick-and-mortar building.
Gambling offline may happen less frequently or involve more skill (depending on the games you enjoy), but the tax laws remain the same. If you’re playing as a hobby, you can win with no taxation repercussions.
You shouldn’t mistake taxation for fees. For example, when you deposit and play with Interac in Ontario, as long as you are a casual player, you don’t face any fees.
Crypto gambling taxation
Much like any other form of gambling, if it is done on a casual basis, even crypto gambling is not taxable. The form of payment used, such as Bitcoin or Litecoin, does not affect if gambling winning taxes in Ontario apply.
All recreational players are welcome to explore what crypto casinos in Ontario have to offer without the fear of losing any winnings. You can use your favorite cryptocurrency while gambling online with total peace of mind.
Declaring Your Gambling Winnings
When gambling online becomes your main source of income, it can be declared a business with expenses that must be considered. At this point, gambling taxes in Ontario come into play, and you will have to declare every winning streak that comes your way.
Professional gamblers must report winnings as a form of income, whether you’re playing poker, betting on sports, or enjoying online slots.
When declaring winnings, you must provide as much information as possible. This could include tracking how much you spend and lose when playing, which sites you frequent, and what your strategy entails.
By providing as much information as you can, you stand a better chance of receiving a tax break. However, you could also be audited and assessed more closely, as the CRA will want to verify that your claims are true and can be proven.
What if you forgot to declare your gambling winnings?
Not declaring your winnings to the tax man is never a good idea. You’ll receive an Unreported Income notice if you fail to declare your gambling winnings. From there, it will be determined if you’ll receive additional taxes, fines, penalties, or interest charges over and above what you already owe. Just like any other form of income, professional gamblers can’t ignore the winnings they’ve received.
Professional vs Amateur Gamblers
You may be wondering what sets professional and amateur gamblers apart. First, amateur gamblers can play as much as they please without taxes eating away at the winnings. For professional gamblers, taxes are always a factor to consider. They must be declared as they would with any other profession.
Secondly, just as amateur players aren’t taxed, there are no benefits available either. What do we mean by this? Professional gamblers are able to claim losses as deductibles and can even claim back for running costs incurred by their business. If gambling online is a business, then all of the necessary aspects must be met.
Unfortunately, it’s not quite black and white when it comes to declaring yourself as a professional player. There are many factors that the Canadian Tax Court must consider before ruling whether a casual player is, in fact, a professional gambler. Simply applying a strategy in live dealer casinos in Ontario does not make you a professional player.
How to become a pro player
- Attend regular tournaments
- Make gambling your main source of income
- Keep records of losses and wins
- Attend classes and practice your skill
- Earn money from gambling regularly
- Have strategies in place that can be proven
Are Gambling Winnings Taxable in Ontario?
For the most part, gambling winnings in Ontario are not taxed, particularly for those who simply enjoy playing casino games as a hobby.
But there is a fine line between enjoying gambling for the entertainment it provides and turning it into a business.
If you intend to play casino games to make a living, it’s considered a profession. All professional gamblers are taxed at a rate of 9.15% when earning under C$85,000. Ontario sports betting tax works similarly, but this differs for poker players.
Poker is a game of skill, and there are factors that may determine whether or not taxes apply. For instance, if you’ve received poker training or have the ability to gain a profit due to your skill, it could be considered a profession. This would need to be assessed by the Canada Revenue Agency and may even be taken to the Tax Court of Canada if agents are unable to determine this for themselves.
How much can you cash out from an online casino without being taxed?
No one wants to deal with taxes, and for casual gamblers, there’s no maximum to how much you can cash out. Whether you’ve managed to win C$50 or C$5000, you won’t be penalized or taxed based on how much you withdraw from your account.
All winnings are tax-free in Ontario when the games are intended to be played purely for entertainment.
If you’re playing at Ontario online casinos as a professional and making an income, all winnings are subject to taxes.
What Happens If An Ontarian Wins In Vegas?
If you find yourself in Las Vegas on a hot winning streak, it’s important to remember that taxation in the US works differently. If you win the US, you’ll be taxed under US laws. As a Canadian, you will still be subject to those laws, and that means leaving a chunk of your winnings with the IRS.
A 30% tax will apply to any winnings you claim over $1200. There are no differences between betting casually or as a professional, and all winnings must be declared as such. The good news is that thanks to the Canadian-US tax treaty, you can recover some of the taxes imposed by completing a refund form.
To do so, you will need a Taxpayer Identification Number, and you will also have to file a US non-resident tax return once the financial year has ended. It is also recommended that you keep track of your wins and losses, as the IRS is more likely to provide a refund with this information included when you complete the 1042-S Form.
Are Gambling Losses Tax Deductible In Ontario?
If you’re a professional gambler in Ontario, you’re welcome to declare your losses and attempt to receive compensation from the tax man. However, as a casual player, you’re out of luck. Just as winnings aren’t taxed when you’re a reactional player, losses aren’t deductible either.
One of the toughest parts of claiming losses when declaring your taxes is proving how much you spent while gambling. Gambling taxes in Ontario are best handled by a professional, especially when navigating tricky situations like losses.
Recap: Ontario Gambling Taxes
- Gamblers who play for fun aren’t taxed on winnings
- Laws deem only income can be taxed
- Professional gamblers can be taxed on their winnings
- Gambling at a crypto casino is also free of taxes
- Winnings won at a US casino must be declared
- Lottery winnings are only taxed if interest has been earned
- Gambling losses aren’t tax deductible for casual players
Gambling in Ontario is a fun way to pass the time, and the laws are in your favor when it comes to paying taxes on winnings. If there’s a good time to enjoy your freedom to play and win at Ontario online casinos, it’s now – but only if you’re a recreational player. It’s important for those that fall into the “professional” gambler category to ensure you declare your winnings.