Are lottery winnings taxed?

Any Canadian lottery, bingo or casino winnings are tax-free for Canadians. However, for U.S. persons (U.S. citizens, Green Card Holders, or other U.S. Resident Aliens), Canadian gaming winnings are taxable on their U.S. return.

The following scenarios would make winnings applicable for taxation from the Canada Revenue Agency (CRA) and Revenu Québec.

  • Professional Gamblers:

    For anyone who is a professional gambler, their earnings from casino winnings and other sources are classified as business income and are taxable as such. At the same time, professional gamblers can claim business expenses too. However, any losses from these winnings are usually not recognized by the CRA or Revenu Québec as business losses and can’t be claimed as such.

  • Workplace contests:

    Any awards that include monetary value are considered taxable employment benefits. All awards should be reported by your employer on your T4 statement in Box 40. Sometimes, your employer will deduct benefits and or other taxes on these awards before you receive them.

  • Interest accrued on lottery winnings:

    Any investments created from lottery, casino, or bingo winnings (including interest income made from a bank account) are always taxable.

    • Tax saving tip: To avoid paying taxes on the interest from your gambling winnings, consider placing your winnings in your Registered Retirement Savings Plan (RRSP) if you have enough contribution room or a Tax-Free Savings Account (TFSA) could be another choice. However, gambling winnings stored in RRSPs or TFSAs could have other filing requirements for U.S. citizens or Green Card Holders.

For more information