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How are winnings taxed in Canadа? Understanding the taxation of online casino winnings.

Do you find yourself asking whether your substantial winnings at an online casino, live casino, or sports betting site need to be reported and taxed by the tax authorities? The question of whether you must report and pay taxes on a stroke of luck like this is undoubtedly on your mind. What does the gambling law in Canadа say about it, and am I obligated to report a bookmaker's or casino winnings? All this and more will be revealed in this informative article.

Online Casino Winnings Tax Canadа How are winnings taxed?

Editor: Roberta Spells

Last updated: August 29,

Reading time: 5 min

How are gambling winnings generally treated?

The income tax law is applied in this case, not the gambling law.

In this country, there are 7 types of income recognized as taxable income...

  • through self-employment
  • through non-self-employed work
  • through agriculture and forestry
  • by a commercial enterprise
  • through rental
  • through its own capital assets
  • through other income

The topic of income from self-employment is significant for a group of individuals referred to as professional gamblers, who exist not only in Canadа but also in Germany. Individuals who only test their luck as a pastime do not fall under any of these sources of income from gambling. That leaves us with the category of "other income," which we will discuss below.

What are other types of income?

In the German Income Tax Act (EStG), this question is regulated in Section 29, which lists four points.

This includes income:

  • from recurring references
  • from the sale of land and in speculative transactions
  • from services such as occasional mediation and the rental of movable objects.
  • Function fees of officials of public-law corporations.

None of these points are related to income from gambling in online casinos.

Do online casino winnings incur an income tax obligation?

You've just learned that money from gambling winnings is not considered taxable income. Therefore, the answer for gambling users is clear: they do not have to pay taxes on their winnings. This applies to players who play games in online casinos with Canadian and EU licenses, regardless of whether it's online poker or live casino. The tax obligation is tied to the residence of the online casino player. Therefore, no taxes need to be paid in their own country or in the country where the online casino is located or holds its license. Canadian tax law (BMF) applies, and it does not impose any tax on your online casino winnings.

What should be taken into consideration when it comes to online casinos from abroad?

There is one exception to what we have just discussed. This comes into play when online casinos do not possess EU licenses, which is rare, however. In such cases, it is possible for the gambling player to have to pay a capital import tax when withdrawing their winnings. This taxation, however, is not related to the payment of gambling taxes but exists because there is no corresponding trade agreement.

What about professional players?

In Germany, the term "professional gamblers" is used to refer to those players who consistently achieve winnings based on their skill. However, this definition is unstable and a subject of contention in German courts. Conversely, in Canadа, there is no distinction between hobbyists and professional gamblers, without any exceptions. In this case, winnings do not need to be taxed.

Slot machines without taxes

Online casinos offer a wide variety of games, with slot machines, also known as slots, being the most popular. You can start playing with as little as $0.01, like the popular slot game "Book of Dead," which has the potential to award million-dollar jackpots. These massive payouts are made possible by progressive jackpots. The fact that you can win such a significant amount of money playing these online casino games without having to pay taxes on your winnings is truly remarkable.

5 popular progressive jackpot slot machines at the casino provider:

  • Divine Fortune
  • Reel Keeper
  • Mega Fortune
  • Frost Queen
  • Tycoons

Poker tournaments without taxes

Poker played on the internet is an extremely popular form of gambling that offers not only excitement but also a variety of options. One of the most well-known and favored variations is Texas Hold'em, in which each player receives two concealed cards, while five community cards are placed face up on the table. The objective is to form the best poker hand using five cards. While winning does rely on luck, participating in a poker tournament also demands skill, experience, and strategic thinking.

5 popular variations of poker played by gamblers:

  • Texas Hold'em
  • Omaha
  • Stud
  • Draw
  • Horse

Live casino gambling without taxes

There are various aspects to gambling, and to provide a more authentic experience, online casinos have introduced live dealer games. These games cater to customers who want the atmosphere of a brick-and-mortar casino but prefer to play from the comfort of their own homes. In studios with real people, the gameplay is streamed 24/7. Players have the opportunity to interact with the dealers through a live chat feature and sit alongside other participants at a variety of tables. The betting limits range from $0.10 to $15,000.

Available gambling games with 3 popular variations:

  • Roulette: Lightning, Speed, and Immersive XXXTreme.
  • Blackjack: Traditional Tempo, Personal Perspective, Complimentary Wager.
  • Baccarat: Mega, Bonsai Speed, and Peek;
  • Play poker games such as Bet on, Triple Card, and Caribbean Stud.

Game shows without taxes

We can also introduce you to the game shows regarding the topic of "Live Casino". Online casinos, with their gambling license, are authorized to offer these games along with the rules. If a player has a question, they can message the game master through the live chat and receive a response. These games of chance are just as popular among Canadians as the lottery and come in several variations.

5 Gameshows Available in Online Casinos:

  • Monopoly
  • Agreement or absence of agreement
  • Crazy Coin Flip
  • Mega Ball
  • Dream Catcher

Sports betting without taxes

Players can choose to collect winnings not only from playing online casino games, but also from the sports betting section of the online casino (e.g., on win2day by Casinos Canadа AG) or from a separate bookmaker. The great thing is that even here, the tax office does not have access to the winnings. So, players have the option to decide whether they want to rake in winnings from an online casino provider or a sports betting provider.

5 popular sports that Canadians bet on:

  • football
  • Ski racing
  • Eishockey
  • Formula 1
  • Tennis

Conclusion on: Taxation of winnings from online casinos

So now you're well informed about how to handle casino winnings taxation in Canadа. It's crucial that the online casino you choose operates under a gambling license issued by an EU country, as this ensures that your winnings won't be subject to any mandatory reporting to the tax authorities or other governmental bodies. Here's an important tip to keep in mind: always abide by the regulations of the specific state you reside in!

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