When Gambling Becomes Taxable Business Income in Canada

Why the question is about a source of income

The Income Tax Act does not contain a section that says gambling winnings are taxable or tax-free. Instead, paragraph 3(a) builds a taxpayer's income from the amounts earned from each office, employment, business and property, and section 9 says that income from a business or property is the profit from it. Gambling therefore becomes taxable only if the activity amounts to a source of that kind, most plausibly a business. You can read both provisions on the Justice Laws site.

That framing explains why two people with the same annual net result can be treated differently. The amount is not the test. What matters is whether the way the person gambles looks like carrying on a commercial activity, as opposed to a personal pastime that happens to produce money in some years.

The two questions courts ask

Canadian courts use the approach set out by the Supreme Court in Stewart v. Canada, 2002 SCC 46. In summary, the first stage asks whether the activity is pursued with a view to profit or is a personal endeavour. If it is clearly commercial, the second stage asks whether the income is from a business or from property. For gambling, the first stage does nearly all the work, because a person is rarely earning gambling income from property.

The commerciality part has two ingredients as the case law describes them: a subjective intention to make a profit, and evidence of businesslike behaviour that supports that intention. A reasonable expectation of profit is one factor among others, not a gate that every activity must pass. We mention this because many online summaries imply that a single loss-making year proves a hobby; the framework does not say that.

What the poker decisions turned on

Poker is where the issue has been litigated, since results depend partly on skill and tournament prizes can be large. In Duhamel v. The Queen, 2022 TCC 66, the Tax Court allowed the appeals of a player who had won a major tournament, and the reassessments for 2010 to 2012 were referred back to the Minister. Later the same year the same court reached the opposite conclusion in Fournier Giguère v. The King, 2022 TCC 132, and in two 2023 decisions, Bérubé (2023 TCC 12) and D'Auteuil (2023 TCC 3).

The Federal Court of Appeal heard the three later cases together in 2025 FCA 112, delivered on June 10, 2025, and dismissed all three appeals. Commentary on the judgment says the court relied on the players' explicit intent to earn a living from poker, the significant time and effort devoted to it, and the demonstrable application of skill and expertise. Commentary on the Tax Court decisions adds the factors that moved the judge: poker financing the player's lifestyle, profits sustained over several years, and no other income that covered those costs.

The reading we take from the group of cases is narrow. Winning a lot is not what makes a player a professional; it is evidence that the activity is the person's livelihood, organised like a trade. The full decisions are published by the Federal Court of Appeal, and anyone in a borderline position should read them or take advice rather than rely on a summary.

What the appeal court did and did not decide

It helps to read the 2025 judgment for what it says about its own role. The Federal Court of Appeal concluded that the Tax Court judge had made no error of law and no palpable and overriding error of fact. That is a deferential standard: the appeal failed largely because the trial judge's findings about each player's circumstances were open to him. It is not a declaration that every full-time poker player is in business, and it is not a statement about other games.

The appellants had also argued, in the alternative, that poker is a betting game for the purposes of paragraph 40(2)(f). The court dismissed the appeals as a whole, so that argument did not help them. For a reader, the practical lesson is that the outcome depended on individual facts, which is also why two players with similar winnings were treated differently in the Duhamel and Fournier Giguère decisions.

Indicators, side by side

No single factor decides the outcome, so the table below is a checklist of the questions that appear in the case law, not a scoring system. A row that reads 'recreational' does not protect a person whose other rows point the other way.

Games of pure chance sit further from the business end than poker, because there is no skill to apply and no edge to organise around. That is our inference from how the factors work, not a rule the cases lay down, and it is one more reason to be cautious about extending poker rulings to slots or roulette.

A worked example with invented numbers

Take a hypothetical player, Sam, who in one year deposits 60,000, withdraws 72,000 and therefore ends the year 12,000 ahead. If Sam's play is recreational, there is no source of income and nothing to report, which also means that a year ending 12,000 behind would produce no deductible loss. If Sam's play is a business, the 12,000 is the starting point for the profit calculation under section 9, and the costs of earning it enter the same calculation.

The difference is therefore symmetrical in an unwelcome way. Business treatment taxes the good years and can recognise the bad ones, while recreational treatment ignores both. Neither is a choice a taxpayer makes by ticking a box; it follows from the facts, which is why the quality of the underlying records matters more than any label.

Records that help in either direction

The Canada Revenue Agency requires records to be kept for six years from the end of the last tax year they relate to, and a late-filed return restarts that period from the filing date. If you ever need to show that play was recreational, or that a business loss was real, a ledger created at the time is far more convincing than a reconstruction. We would keep:

• Monthly statements for every payment method used with gambling sites.
• The cashier history that each site lets you export, covering deposits, withdrawals and bonuses.
• A simple log of sessions with date, game, stake and result, if play is frequent.
• Any coaching, software or subscription invoices.
• Notes on other income, so that the role of gambling in your finances is documented.

The CRA's guidance on keeping records is on its records retention page.

Where to look next

Foreign casinos raise a separate issue, since another country may withhold tax at source. We explain that for the United States in our piece on US casino winnings and the 30% withholding.

For how the legal framework around gambling fits together, our gambling laws guide is the broader reference, and the online poker page shows how the skill-based game is offered.

If you suspect your play has stopped being fun, the responsible gambling page lists support, and ConnexOntario answers at 1-866-531-2600. A tax adviser who has handled gambling files is worth consulting before you file a return that treats large results as non-taxable.