Your 2024 Guide to Gambling & Taxation in Canada

If you’re living in Canada and likely to win some money through online gambling this year, you need to know where you stand with regard to taxes. Of course, you need to win cash before you have to pay any taxes!

The last thing you want is for a tax bill to creep up on you that you weren’t expecting. What follows is a snapshot of the key details you need to be aware of if you’re gambling for real cash in Canada.

The Gambling & Taxes Relationship

When it comes to the companies who run gambling companies in Canada, they are obliged to pay licensing fees and taxed on their profits. Did you know that some of Canada’s biggest gambling providers are in fact government agencies set up purely to generate funds for worthwhile causes?

Gambling is an industry that generates billions, both from land-based venues and online, so it’s only natural the government would demand a cut in taxes. In many cases, it’s this high tax income that helps get the gambling companies their licenses in the first place – the argument being that gambling is worth putting up with as long as it brings in the big bucks.

When it comes to gamblers themselves and taxes, things get a whole lot more complicated. Some will tell you no tax is ever due on winnings in Canada, while others maintain your liability to pay depends on what your relationship to gambling is.

Points To Consider

The Canada Revenue Agency (CRA) states that, “an individual may be subject to tax on income derived from gambling itself, if the gambling activities constitute carrying on the business of gambling.”

This suggests that any person who partakes in gambling as a business exercise is therefore liable to pay taxes. It’s not clear how we should differentiate the casual gambler from one operating a business, but we might conclude that any individual who derives a meaningful sustained income from gambling would surely be in this category. That would seem to include all those who would state professional gambling as their full-time profession.

Whether it also includes those who supplement other income with regular gambling income is less clear. Reports appear to suggest all individual cases will be judged in isolation, but it's certainly something to be aware of as you fill out your annual tax return. Our best advice is to consult your local tax office.

What to Expect in the Future

Here’s the crazy thing about gambling in Canada right now. Reports suggest as much as C$4 billion is being spent at sports betting sites based overseas by Canadian gamblers. This must be a major concern to the Canadian government and ultimately it could lead to some sweeping changes.

Thankfully, the gambler is unlikely to be impacted. But we do anticipate the Canadian government will look into ways to tax that C$4 billion and/or bring a large chuck of that spending back to their own shores. If we take the UK model as an example, overseas sites are only allowed to serve UK players if they are licensed and regulated by the UK Gambling Commission.

The conclusion to draw is that the Canadian authorities are almost certainly focused on taxing the companies who run gambling operations, rather than those who enjoy gambling.

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