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Gambling Winnings and Tax Comparison: Canada and the UK

People from all over the world love gambling, but not all of them pay the same taxes after winning. Different countries have different tax regulations, so it’s not the same whether you play the game and win in Toronto or in London.

After all, every government understands that gambling has the potential to become a major source of income and they tend to keep the balance between attracting casino companies with affordable rates and taxing them as much as possible. Now, players who gamble in Canada and plan to visit the UK – or vice versa – are probably wondering what to expect in case they end up winning.

This is exactly why we decided to make an overview of tax regulations in both countries and tell you what to expect if you win money in a casino in Canada or the UK. Let’s take a look!

Gambling-Related Tax Rules in Canada

Do you have to file a report on your casino winnings in Canada? The short answer is: Not really.

The Government of Canada has a highly specific gambling-related tax system because the area is not clearly defined. There are two basic options to consider here:

  • Gambling gains as income from a business: This option is highly impractical because traditional businesses are considered to have income streams from office, employment, business, and property. What this really means is that no one ever pays taxes for winning a casino game because it doesn’t fit any of the abovementioned categories.
  • Gambling gains as income from an unenumerated source: If a source of income doesn’t fit the four categories mentioned above, it is considered to be an unenumerated source. But the truth is that this option has not been put to practice. In other words, people who visit the best payout online casino in Canada and end up winning will not be taxed.

The only people who actually report gambling winnings are professional players. This means that you have to be a registered gambler in order to become eligible for the Canadian tax filing system.

Gambling-Related Tax Rules in the UK

Contrary to Canada, Great Britain has a well-developed taxing system that covers all types of gambling games and activities. They have a separate set of regulations for each of the following games: bingo, gaming, betting, slot machines, lottery, and other casino games.

But here’s the good news: the UK focuses almost exclusively on game operators, bar owners, and casino companies when it comes to gambling-related income taxes. The Government is taxing entities that organize gambling, but it lets their customers play the game with no strings attached.

Regardless of the game you’re playing, you can win money and leave the casino without filing a report on your gambling winnings. The rule applies to all games and all types of casinos – offline and online – while the only exception comes in the form of professional gamblers. Those guys need to file a report and declare winnings on their tax returns.

The UK system is also a bit trickier because there is the so-called inheritance tax. Namely, you are only allowed to give someone up to £3 thousand a year if your gambling winnings exceed £325 thousand annually. If you want to give a single person more than $3 thousand, you will be taxed.

At the same time, local authorities will classify gamblers as traders if the latter declare spread betting as their primary source of income. This is another taxing criterion that would make you liable, but it rarely ever happens in reality.

Differences between the Two Systems

It’s easy to spot the similarities between the two systems since both countries avoid taxing casino winners, but what are the differences? Here are the main distinctions:

  • Professional gamblers in Canada are taxed when they win, while the UK doesn’t follow the same pattern.
  • Great Britain is taxing inheritance, which means that players who win more than $325 thousand a year can only give someone $3 thousand without getting taxed.

There are a few more minor differences between the two tax systems, but the ones we mentioned above are crucial.

The Bottom Line

Although being an entire ocean apart, the UK and Canada actually have very similar tax regulations dedicated to gambling winnings. It’s a fortunate fact for players who frequently visit casinos in these two countries because winning a casino game in Canada and the UK is tax-free.

There are only a few exceptions, mainly in Great Britain, but it does not change the fact that you can take your gambling winnings back home in their entirety. The bottom line is that gamblers love visiting casinos in London, Montreal, Manchester, and Toronto because they end up getting what they deserved.