Are Online Gambling Winnings Taxable In Canada
Are Online Casino Winnings Taxable In Canada Today

All countries and governments have their own online gambling tax policies and legislation so we need to look at this question from a global perspective. Firstly we’ll cover the situation in the UK and following that look at how things may differ in the rest of the world.

Do you have to pay tax on your gambling winnings?

UK Gambling Taxes

Key Points

All winnings either online or offline are tax free!
Any betting tax abolished in 2001 by Gordon Brown.
Tax used to be on bookies but they passed to punters.
Bookmakers must now pay 15% POI tax but not punters.
POI tax on any games of chance increased from 15% to 21% but again not for punters.

In Canada, gambling winnings are generally free from taxation.
In short, you don't need to pay any taxes on online casino winnings in Canada; However, if you earn large amounts of money from gambling, you may be taxed; In Ontario, for instance, any income between $42,201 and $84,404 has a tax rate of 9.15%. That jumps up to 11.16% if you earn between $84,404 and $150,000, so heavy gamblers need to be aware.

In the UK any and all winnings from gambling – either online or at betting shops – are entirely tax free and do not need to be declared as part of any tax return.

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Past the million point in gross income, the player will pay a 5.4% tax on any win of $1,200 or more, even if there is a net loss for the year. This is just my opinion, but I think that isn’t fair. If we must tax gambling winnings (which they don’t in Canada), it should be on the net, not the gross winnings, on an annual basis. In Canada, online gamblers who make a living playing games of chance are perceived as professionals, which is why their winnings are seen as income and are, therefore, taxable. The tax rates will depend on the players’ location, as they differ in each of the provinces and territories.

This has been the case since the then Chancellor of the Exchequer Gordon Brown’s budget of 2001, when he abolished Betting Duty which had stood at 6.75%. That duty was removed in an attempt to persuade bookmakers not to move their operations overseas and therefore take jobs and revenue away from the UK economy.

All of that is not to say that there is no tax involved when it comes to gambling in the UK, however, and there is a ‘point of consumption’ tax related to the activity. This does not affect punters themselves, though, and will be dealt with separately further down this page.

Will the situation ever change? Generally speaking there is little chance that this situation will be reversed, either, as the UK tax system is simply not built in such a way that taxing gambling winnings would be viable. This is the case as it is fairly standard within the system that if tax is levied on the income or profit made through an activity, then there must also be an allowance made against losses through the same activity.

With gambling being an activity where overall more losses are made by punters than winnings, therefore, such a change in the tax legislation would cost the UK government revenue. As a result, it is quite simply not something which would be considered. Your betting, casino, slot machine, poker and bingo winnings are yours to keep tax free.

What About Professional Gamblers?

It may seem logical that the tax situation would be different for professional gamblers than it is for occasional punters. When it comes to pure winnings from betting, however, that quite simply is not the case. As we have discussed above these winnings are not taxable and this remains true even for a ‘professional gambler’. That is because HMRC do not recognise professional gambling as a taxable trade.

In fact, within their most up to date ‘Business Income Manual’, HMRC clearly define their position on professional gambling:

‘The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade.’ BIM22017

Gambling winnings, therefore, remain free of tax regardless of whether they make up an individual’s main source of income. Where the situation can get a little more complicated, however, is in the case of income related to gambling but not actually direct winnings from gambling. Appearance fees paid to poker players for playing at certain tournaments, for instance, represent payment for a service provided to the tournament organisers and as such may be taxable.

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Away from the UK, too, tax laws and legislation do differ and it would benefit a professional gambler outside of the UK to research the specific rules and regulations within their own country.

UK Point of Consumption Tax

As we mentioned earlier, Betting Duty for gamblers was abolished in 2001 and was at that time replaced by a 15% tax on gross profits for bookmakers and gambling providers. That tax was initially charged on a ‘point of supply’ basis, meaning that if the bookmaker or company were not based in the UK, then they were not liable. This situation has more recently changed, however.

From the latter part of 2014, the tax on bookmakers’ profits was changed to a ‘point of consumption’ tax by a combination of the Gambling (Licensing and Advertising) Act 2014 and by the introduction of ‘Remote Gaming Duty’. This means that regardless of where they themselves are based, providers must pay a 15% duty on any bets placed by UK customers.

Are Online Gambling Winnings Taxable In Canada

In the 2018 budget chancellor George Osborne announced that the point of consumption tax would rise from 15% up to 21% for all games of chance but sports betting would remain at 15%, for now.

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Gambling Taxes In The Rest Of The World

Country	Taxes
Austria	No
Australia	No
Australia	No
Belgium	No
Bulgaria	No
Canada	No
Czech Republic	No
Denmark	No
Finland	No
France	2% on poker cash pots, 7.5% on sports (+1.8% levy) and 7.5% on horse racing (+8% levy)
Germany	No
Greece	No except lottery at 10%
Hungary	No
Ireland	Bookies pay 1% on all bets – not winnings.
Italy	No
Kenya	No – bookies must pay 7.5% on their winnings.
Latvia	25%
Luxembourg	No
Macau	40%
Malta	No
Nigeria	20%
Netherlands	No expect lottery at 29% above €454
Portugal	No expect lottery at up to 35%
Romania	1% up to 66,750 RON, additional 16% of surpassing margin up to 445,000, additional 25% of surpassing margin over 445,000 RON
Slovenia	No expect lotte

Are Online Casino Winnings Taxable In Canada