Gambling Winnings Tax Comparison: UK vs Canada

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Gambling Tax. Image Credit: Shutterstock

With a large part of their population gambling regularly, both the UK and Canada have specific rules for gambling winnings taxes.

It is estimated that over 75% of Canadians gamble at least once a week.  The locals tend to wager on anything from horse racing to casino gaming and sports betting.  Other big gambling markets such as the UK also have active gambling populations segments.  In the UK, the number of regular gamblers is also high, with over half of the country’s citizens gambling once a week.

With so much money changing hands daily, each country has established unique rules governing gambling winnings taxes.  Read below to see how you might be affected by gambling laws in these two countries. 

How Are Winnings Taxed in Canada?

To win in Canada is not as difficult as in some other markets, such as the United States. While the US legislation specifies precisely how you must file and how much you need to win before reporting it as income, Canada does not.  In the US, different types of money that a citizen receives are considered as income. Whether it is earned by winning a game or by working, the government treats all forms of income the same.

In Canada, the differentiation is apparent. If you are a citizen, and you win playing at a horse track or a casino, your winnings are tax-exempt because they are seen as winnings on a game of chance and not through a steady flow of income, like a regular job.  However, if you are a citizen and you play as a professional gambler, you will owe gambling winnings taxes to the Canadian government. 

Professional gamblers must pay income tax on their winnings as if these were income. The income tax rate is 15 per cent to 29 per cent, depending on the income amount. Canada doesn’t rely on its provinces to collect its taxes. Instead, the Canadian central government collects income taxes on behalf of the regions and then reimburses them via a lump sum.  If an American goes and gambles in Canada, their winnings are taxed at 30 per cent, which is collected when they cash out their winnings.

How Are Winnings Taxed in the UK?

In the UK, winnings are not taxed if you win, and there are no exceptions for different games won. However, the UK gets gambling tax money from various sources. First, there is a point of consumption tax on all wagering proceeds. This means that venues where gamblers play are charged a percentage of the total amount of money betted throughout the country.

Offshore companies must also pay this tax because they collected money from players who are based in the United Kingdom. Also, UK companies must pay additional taxes, which often make their tax liability close to 40 per cent, depending on the company’s profits and the number of gamblers who’ve won.

Rationale Behind Gambling Tax

While each country has unique gambling winnings taxes, debate rages on how the monies collected should be used. Increasingly, there is a push to use tax money to treat people who have a gambling addiction. In Canada and the UK, the rate of people with gambling issues is between two and five per cent.

Many welfare agencies feel that the governments need to assist with gambling addiction and foot the bill for treatment programmes for affected people. In addition, experts have warned that more people need treatment programmes than there are treatment programmes. Governments often pay more in social welfare programmes that mask the problem rather than treatment projects that can genuinely help with gambling addiction.

Because each country’s gambling winnings taxes are unique, you need to ensure that you understand the gambling regulations fully before you gamble. While some countries require noncitizens to pay a percentage of their winnings, they’re not liable for any taxes on their takings in other countries. Many countries also try to encourage tourism by not taxing the gambling income winnings. Since both the UK and Canada rely on tourism income, it makes it easier for tourists to gamble there while vacationing.

Picture of Bojan Lipovic - Digital Project Manager

Bojan Lipovic - Digital Project Manager

Besides polishing his SEO skills, Bojan has a penchant for creative writing. With over half a decade of experience in the online gambling industry under his belt, his written take on the latest news from the Canadian and global gambling industries is an indispensable source of information for the CASINOenquirer team. Bojan’s primary goal is to ensure that players get a superior experience through the top-notch content that he shares.

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