Canada: Must three Poker players pay 3,75 million CAD in taxes?

The Canadian Fiscal Court must presently address the question and decide at which point professional gambling will be considered a job. The current case is about three Poker Professionals who were asked by the responsible tax authorities to pay taxes amounting to around 2,6 million Euro. But what is the reason for this enormous tax claim and what does the law in Germany say?

Those who practise professional gambling and earn their livelihood through it, must also pay taxes for it. That is the policy which still stands in many countries. The problem: When does a hobby become a profession? How high must the intake be and over which time frame must it be sustained to be liable for tax payments? This is the question that the Canadian Fiscal Court must answer.

Poker Professionals win several million CAD

In the time period between 2008 and 2012 the three Poker Professionals Philippe D’Auteuil, Antoine Bérubé and Martin Fournier-Giguère took part in many different poker tournaments - and they were successful. During the whole period the professionals registered intakes amounting to 5,1 million CAD, 3,2 million CAD and 1,7 million CAD respectively.

The responsible tax authority in Canada has of course received the information that the poker professionals were so successful. Sometime later the poker players were asked to pay up. A sum amounting to 25 % of the winnings was requested. The tax authority argued that these are obviously poker professionals who have a job as professional poker players. Besides this, they had also partly suspended their studies to be able to concentrate on poker playing.

Federal Tax Authority now requests 3,75 million CAD

The Tax Authority Canada Revenue Agency (CRA) is meanwhile requesting the total sum of 3,75 million CAD from the three poker professionals. Besides the tax debt, the poker players should now pay a fine of 1,25 million CAD.

Similar to Germany, in Canada it is the policy that winnings from gambling activities are tax free. However this is valid only when gambling is a hobby. Those who play professionally and therefore earn their livelihood from gambling, must of course pay taxes, as one does with any other job. Last April, in an article, we asked whether one can be a professional “job gambler” in Germany.

Poker players feel that they are right

The first hearing of this case took place in September. The involved poker players defended themselves and went on record as saying that they are only hobby gamblers. Indeed they had made substantial winnings and had also played regularly. However they had subsequently also lost a significant share when they gambled further. The losses were however not taken into consideration by the Canadian Tax authorities.

The Canadian Fiscal Court has now to answer the question, among others, if poker is considered as a fully-fledged gambling activity, or if it is more a strategy game. Further to this, they have to clarify, whether regular participation in gambling can be compared to a professional activity. In June we had reported about an interesting judgement of the Fiscal Court in Münster. Here the court came to the decision, that online poker winnings can be taxable.

Conclusion

We have to wait and see what the Canadian Fiscal Court will finally decide. It is a fact that in the future, it will be difficult to differentiate between hobby players and professional players. The transition is quite smooth. However the consequences, as can be seen from this case, are considerable. The Canadian Tax Authority is still requesting the sum of 3,75 million CAD, which when converted amount to around 2,6 million Euro.

Image Source: https://pixabay.com/de/photos/poker-karten-as-könig-kasino-2619048/