Hi pascalrash,
Thank you for giving me the opportunity to post an answer to your
question. Notwithstanding online gambling, whether or not winnings are
taxed is generally determined by whether or not they are considered
for profit (livelihood) or prize money (windfalls).
IT-213R Prizes from lottery schemes, pool system betting and giveaway contests
Pool System Betting
4. Paragraph 40(2)(f) also provides that no taxable capital gains or
allowable capital losses arise from the disposition of a chance to win
a bet or a right to receive an amount as winnings on a bet in
connection with a pool system of betting referred to in section 188.1
of the Criminal Code. The nature of pool system betting is such that
the only winnings are in the form of cash from the respective pool.
Consequently, no additional capital gain or loss tax consequences
could arise on subsequent disposition of the winnings and thus it is
not necessary (as described in 2 above, in the case of a lottery) to
deem the winnings to have been acquired at fair market value.
5. A "pool system" of betting is defined in the Athletic Contests and
Events Pools Act as a pool system of betting on any combination of two
or more professional athletic contests or events. The fact that a
degree of skill is involved in the selection of the outcome of the
contest or event in the pool betting distinguishes it from a lottery
scheme as described in 3 above.
http://www.cra-arc.gc.ca/E/pub/tp/it213r/it213r-e.html
Windfalls
3. Subject to the comments in the current version of IT-213, Prizes
From Lottery Schemes, Pool System Betting and Giveaway Contests, and
those in 4 and 10 below concerning Voluntary Payments and Gambling
Profits, a taxpayer in receipt of an amount which can be described as
a "windfall" is not subject to tax on the amount. Factors indicating
that a particular receipt is a windfall include the following:
(a) the taxpayer had no enforceable claim to the payment,
(b) the taxpayer made no organized effort to receive the payment,
(c) the taxpayer neither sought after nor solicited the payment,
(d) the taxpayer had no customary or specific expectation to receive the payment,
(e) the taxpayer had no reason to expect the payment would recur,
(f) the payment was from a source that is not a customary source of
income for the taxpayer,
(g) the payment was not in consideration for or in recognition of
property, services or anything else provided or to be provided by the
taxpayer, and
(h) the payment was not earned by the taxpayer as a result of any
activity or pursuit of gain carried on by the taxpayer and was not
earned in any other manner.
Gambling Profits
10. Profits derived from bookmaking or from the operation of any
gambling establishment (carried on legally or otherwise) constitute
income from a business. In addition, an individual may be subject to
tax on income derived from gambling itself, if the gambling activities
constitute carrying on the business of gambling; see the decision of
MNR v. Morden, (1961) CTC 484, 61 DTC 1266 (Ex. Ct.). The issue of
whether or not an individual's activities are such that he or she can
be considered to be carrying on a gambling business is a question of
fact that can be determined only by an examination of all of the
circumstances and the taxpayer's entire course of conduct. Although no
one factor may be conclusive, the following criteria should be
considered in making the determination: (a) the degree of organization
that is present in the pursuit of this activity by the taxpayer,
(b) the existence of special knowledge or inside information that
enables the taxpayer to reduce the element of chance,
(c) the taxpayer's intention to gamble for pleasure as compared with
any intention to gamble for profit as a means of gaining a livelihood,
and
(d) the extent of the taxpayer's gambling activities, including the
number and frequency of bets.
http://www.cra-arc.gc.ca/E/pub/tp/it334r2/it334r2-e.html
"Canadian law allows only the provincial government and some charities
to run gambling operations. It is now clear that this law, section 207
of the Criminal Code of Canada (?the Code?), makes it illegal to
operate, or place a bet through, an offshore Internet casino."
http://www.gaminglawmasters.com/jurisdictions/canada/inet_canada.html
I hope that answers your question!
Thanks again,
hummer
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