They say that only two things in life are certain: death and taxes. But is this always true?
People who are gainfully employed always need to pay taxes. However, gambling winnings tax laws aren’t so simple. Read on to learn the ins and outs of taxable income and gambling revenue.
Does Canada Have a Gambling Winnings Tax?
Unlike the United States, Canadians rarely need to pay taxes on gambling winnings. This is true of both those who bet on sports and play casino games. It’s also true of both online and in-person gamblers.
This information comes from Paragraph 40(2)(f) of the Income Tax Act. The Canada Revenue Agency does not collect any funds from recreational players, regardless of the province they live in.
This is because it’s not considered a regular income source in Canada. You’ll only be taxed on funds that you get from employment, property, or other legal sources of revenue. Those who win recreational games aren’t doing it as a job, so it’s tax-free.
Professional Gamblers and Taxation
There is one situation where there’s a gambling winnings tax in Canada: professional gambling.
A professional gambler is someone who places bets regularly as a way of generating income. Most sports teams and events meticulously and accurately project the outcome of games far in advance. Other professional gamblers are excellent at card games and make a lot of money playing them online or at in-person casinos.
If you’re a professional gambler, you need to declare the winnings on T3, T5, and T5013 forms. You’ll be taxed by between 15% and 33%.
Are Bookies Taxed in Canada?
Like professional gamblers, Canadian bookies need to declare their winnings on their tax forms.
This is because bookmaking is a business above all else. In the eyes of the law, it’s similar to running an eCommerce shop or being a contractor. The winnings that you get qualify as professional income.
However, you’re only going to be taxed by the jurisdiction you operate from as a bookie. If you live in a US state and cater offshore to Canadian gamblers, you’re going to be taxed by the state and federal governments under which you operate. You’ll pay taxes to them instead of to the Canadian government.
This means that those bookies would be subject to different tax rates and paperwork depending on the state they live in.
Are These Taxes Worth It?
While taxes are a pain, they’re ubiquitous across all professions. Luckily, for bookies and professional gamblers, they’re usually worth it.
That’s because bookies can make up to $100,000 per week. That adds up to an annual $5 million profit. This takes some work and requires your sportsbook or casino to be a full-time job, but even those who run small-time sportsbooks can make $30,000 per year.
Professional gamblers can make up to $64,000 per year, which is, of course, a great salary. The average of $49,666 is also more than enough to live on for one person.
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Become a Sports Betting Agent
Now that you know the basics of gambling winnings tax laws in Canada, it’s time to begin making taxable income as a bookie. Ace Per Head is committed to offering a mobile-ready platform that bookies can easily launch and run on their smartphones. Create a custom package to try a free six-week promo of our services.
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