For most Canadian players, casino winnings are not taxable. The Canada Revenue Agency (CRA) generally treats them as a windfall: a one-off receipt that is not income. There are exceptions. Gambling can become a taxable business, income that your winnings earn is taxable, and winnings in the United States follow US rules. This guide explains each case and links to the official sources.
The short answer
- If you gamble for fun, your winnings from casinos, online casinos and lotteries are generally not taxable, and you do not report them on your tax return.
- If gambling is a business for you, your net results are business income.
- Interest or other income that you earn on your winnings is taxable.
- Winnings in the United States are not taxable in Canada, but the US may withhold tax from them.
Why most gambling winnings are not taxable
The CRA’s Income Tax Folio S3-F9-C1 says that a windfall is not subject to tax. It lists the signs of a windfall: you had no right to the payment, you made no organized effort to get it, you had no reason to expect it to repeat, it is not a usual source of income for you, and you did not earn it through an activity carried on to make a gain. Playing for entertainment fits this description. The Folio also notes that games of pure chance, such as lotteries, lack the features of a business.
The same rules treat a hobby in a simple way. The CRA does not count the money you receive from a hobby, and it does not let you deduct what you spend on it. For a recreational player, that means gambling losses cannot be deducted either.
These rules look at the nature of your activity. They do not turn on the size of a win or on whether you play online or in a land-based casino. Lottery prizes of any amount are not taxable, unless the prize counts as income from employment, a business or property, or as a prize for achievement.
When gambling becomes a business
The CRA says gambling can produce taxable business income, or a business loss, when it is a source of income for you. Whether that is the case is a question of fact. No single factor decides it, and the CRA looks at your whole course of conduct. The factors it lists are:
- how organized your gambling is;
- whether you have special knowledge or inside information that reduces the element of chance;
- whether you gamble for pleasure or to earn a living;
- how much you gamble, including the number and frequency of your bets.
The Folio notes that the cases where gambling was held to be taxable involve people who used skill, knowledge or inside information. The CRA’s audit manual adds that skill-based activities such as poker can be a business when they are carried on in a sufficiently organized and commercial way. It names profit intention, time spent, level of organization, reliance on skill and whether gambling is your main source of income as relevant factors.
If gambling is a business for you, you report the net result on Form T2125, the CRA’s form for business income, and you can deduct reasonable business expenses. If you think this may apply to you, speak to an accountant.
Income earned on your winnings is taxable
Even when the winnings themselves are not taxable, income that they generate is. For example, if you invest a win and earn interest, you must report that interest on your return. Revenu Québec states the same rule for lottery winnings.
Winnings in the United States
If you win money at a US casino or in a US lottery, the CRA says you should not report it on your Canadian return, because it is not taxable in Canada. You also cannot claim a Canadian credit for tax that the US withheld.
In its guide for Canadians visiting the US, the CRA explains that the US generally withholds 30% from gambling winnings of non-residents, and that winnings from blackjack, baccarat, craps, roulette and the Big-6 wheel are exempt. Under the Canada-US tax treaty, you can claim gambling losses up to the amount of your US winnings for the year, and you ask for a refund of withheld tax by filing a US Form 1040NR. You cannot claim losses from the games whose winnings are exempt. Keep accurate records of every win and loss, and check the current CRA and IRS guidance before you file, because rates and rules can change.
Records worth keeping
Gambling winnings are not taxable, but the CRA can still ask where your money came from. Its audit manual says that when a person explains deposits or assets as winnings, the auditor asks for the type and frequency of gambling, the size of bets, the source of the money used to bet, how often the person wins and loses, and documents that support significant amounts. Keep your casino account statements, deposit and withdrawal history and any lottery tickets or slips.
Provinces
The federal rules described here apply across Canada. Provincial income tax is calculated on taxable income, so winnings that are not taxable do not add to it. Québec has its own tax return, and Revenu Québec also treats lottery winnings as non-taxable and interest earned on them as taxable. Taxes and fees that casino operators pay do not change what a player owes.
Frequently asked questions
Do I have to report casino winnings on my tax return?
Not if you gamble recreationally. Winnings are generally treated as a windfall and are not reported. If gambling is a business for you, report the net result as business income.
Are online casino winnings taxable in Canada?
The tax treatment depends on your activity, not on whether you play online. For a recreational player, online casino winnings are generally not taxable, just like winnings from a land-based casino.
Are lottery winnings taxable in Canada?
No. Lottery winnings of any amount are not taxable, unless the prize counts as income from employment, a business or property, or as a prize for achievement. Interest or other income earned on the money is taxable.
Can I deduct my gambling losses?
Not as a recreational player. Losses can be deducted only if gambling is a business for you, and then against that business income.
Will the casino send me a tax slip?
Canadian casinos generally do not withhold tax from player winnings or issue a tax slip for them. A missing slip does not decide whether income is taxable.
What about winnings paid in cryptocurrency?
The winnings are treated the same way as other winnings. If the cryptocurrency changes in value after you receive it, selling or spending it later may create a taxable gain or loss. Check the CRA’s guidance on digital currency or ask an accountant.
General information, not tax advice
We are not tax advisers. This guide explains general rules as of the date above. Your situation may differ and tax rules change. For advice on your own case, speak to a qualified tax professional or contact the CRA.