Winning taxes: Do players pay?

Short answer

For most players in Canada, winnings for lotteries, casinos, bets, etc. - are not taxed and are not declared as income. This directly follows from the CRA's clarification of "lottery wins." The exception is when the prize is essentially income from employment/business/property (rare cases).

When there is no tax (normal)

Lotteries, 50/50, instant tickets, prizes on the official websites of the provinces - winning is considered a "windfall" and is not taxed for an ordinary player. This position is also confirmed by provincial operators (OLG, BCLC) in their FAQs.

Important: if you place/invest a win and receive interest/investment income, this further income is taxed and reported in the usual way.

When tax can be

1. Professional game (game as business).

If the activity is of a commercial nature (systematic, strategy, banking, profit expectation), profit can be qualified as business income and subject to income tax. The approach is based on the Supreme Court of Canada test (Stewart v. Canada, 2002) on the distinction between personal passion and business; courts and tax practices explicitly apply these principles to poker/betting.

2. Prizes paid by annuity ("for life").

When a "lot for life" is paid in periodic payments, such payments usually qualify as annuity payments; tax consequences may differ from a single amount (provincial operators indicate special conditions/options: annuity vs lump sum). Before choosing a payment form, you should check the conditions of the game and get advice.

Foreign winnings (e.g. US)

The United States imposes gambling winnings on non-residents at a rate of 30% at the source. Canadians receive a form of 1042-S with retention. Under the Canada-US tax treaty, it is possible to file for the return of part/all of the withheld amounts, reducing the taxable base for documented losses (the "wins minus losses" rule). In practice, this is done through Form 1040-NR with applications.

In Canada, such foreign winnings are still not included in a non-professional player's income (but comply with US document requirements).

Frequent questions

Do I need to declare Canadian winnings in the annual declaration?

Not if you are a regular player and the prize is not income from employment/business/property.

And if the prize is a car/ticket?

By itself, the natural prize is not taxed on the ordinary player; however, there may be associated costs (registration, insurance, etc.) that are not replaced by tax. See the conditions of the draw.

Online winnings on the "official" websites of the provinces (Espacejeux, PlayNow, ALC, PlayAlberta, OLG) are taxed?

No, the rule is the same as for offline: this is windfall for an ordinary player (see provincial FAQs).

When exactly to go to the consultant?

If you have regular + profitable gaming activities with signs of business, an annuity/" for life" prize, a big win abroad (especially the USA with retention), or you doubt the qualifications of income.

An ordinary player in Canada does not pay (declare) the winnings tax, but the tax imposes a future winnings investment income.

Exceptions: professional play as a business, annuity payments and foreign winnings with features of deductions/returns. For significant amounts - save documents and consult a specialist.