Jonathan Duhamel, first Canadian winner of the World Series of Poker, celebrates at a press conference in Toronto in 2010. Article content
When Quebec poker champion Jonathan Duhamel won the World Series of Poker Main Event in Las Vegas in 2010, a tournament that came with a top prize of nearly US$9 million , his assumption was that his gambling winnings would be tax free. This week, the Tax Court of Canada agreed with him, but his victory came after nearly a decade battling the agency over the winnings, which included an 11-day trial in Montreal and Ottawa last fall. Article content
Duhamel was 23 when he won the no-limit Texas Hold’em tournament, crowning him the world poker champion and propelling him into the upper echelons of the poker world. In October 2010, he entered into an agreement with the online poker site PokerStars to act as their spokesperson and participate in promotional events as well as a number of online and face-to-face tournaments. He was paid $1 million for the initial year, and the agreement was renewed annually until 2015, at lower amounts.
After his big tournament win, Duhamel continued to play poker and realize net winnings from his gambling activities which ultimately caught the eye of the tax man. The CRA concluded that Duhamel operated a business through his poker activities, and thus reassessed him, saying he earned business income for the 2010, 2011 and 2012 taxation years of $4,866,117, $383,916 and $106,775, respectively, representing his net winnings from the poker tournaments in which he participated during the years in question. Article content
The sole issue before the court, therefore, was whether the net winnings derived from Duhamel’s poker gaming activities had to be included in the calculation of his income as income from a “source that is a business” under the Income Tax Act for the three tax years in question.
According to Duhamel, since poker is a game of chance, the winnings from poker gambling activities are simply not taxable under the Tax Act. This is consistent with the general rule in Canada that gambling, wagering and […]
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