Are Gambling and Lottery Winnings Taxable in Canada?

For most people, no: lottery and gambling winnings are not taxable in Canada. The Canada Revenue Agency says you do not report lottery winnings of any amount, and casual gambling wins are treated the same way, because gambling for fun is not a source of income. The exceptions are narrow: winnings that are really income from employment or a business, and the income your winnings earn after you have them.

This guide sets out what the CRA’s published guidance says. It is general information, not tax advice; if a large prize or regular betting income is involved, speak to an accountant or the CRA.

What the CRA says about lottery winnings

The CRA’s list of amounts that are not taxed includes “lottery winnings of any amount”, unless the prize can be considered income from employment, business or property, or a prize for achievement. A Lotto Max jackpot, a Lotto 6/49 Gold Ball prize or a scratch ticket win bought with your own money is therefore not reported on your return.

The same CRA page adds the part people forget: “Income earned on any of the above amounts is taxable.” If you put a $1 million prize in a savings account or invest it, the interest, dividends and capital gains it produces are taxed in the normal way from then on. The results and rules of the national draws are on our lottery page.

Are gambling winnings taxable in Canada for casino and sports bettors?

Casino wins, sports betting wins and poker winnings of a recreational player are not taxed either. The CRA’s income tax folio on lottery winnings and miscellaneous receipts explains that gambling is taxable only when it amounts to a business, and that treating every regular bettor as running a business would be wrong. The tax courts look at the whole picture, and the cases where gambling was taxed involved features such as inside information, special knowledge and skill used in an organized way.

Losses work the same way in reverse. A recreational player cannot deduct gambling losses, because the activity is not a source of income in the first place.

When betting can become a business

The CRA’s audit manual says that skill-based poker played in a sufficiently organized and commercial manner may be a business. If your winnings may fall into this category, get professional advice, because business income is taxable and the rules on expenses and losses change.

Prizes that count as income

Some prizes are taxable because of how you got them, not because they came from a draw. The CRA’s exception covers prizes that are really income from employment, business or property, or prizes for achievement. A prize you receive because of your job is the typical example. A ticket you bought yourself at a retailer or from a provincial site such as OLG is not in this group.

For-life prizes and annuities

Daily Grand pays its top two prizes as $1,000 a day or $25,000 a year for life, or as a lump sum. We could not confirm on an official CRA page how each annuity payment is treated, beyond the general rule that lottery winnings are not taxed and that income earned on them is. If you face that choice, ask the lottery corporation and a tax professional before you decide.

Winning in the United States

The CRA says US gambling winnings are not reported on a Canadian return, and US tax withheld on them cannot be claimed as a credit in Canada. If you win at a US casino, any US withholding is a matter between you and the US tax authorities, not the CRA.

Gambling winnings tax in Canada and fee scams

Because prizes are not taxed, any message saying you must pay a tax or fee before a Canadian lottery prize can be released is a scam. A CRA taxpayer alert states that you never pay it taxes or fees to collect a Canadian lottery prize. Do not send money or banking details; contact the lottery corporation using contact details from its own website. If gambling is costing more than you planned, our responsible gambling page lists limit tools and where to get help.