Crypto Gambling Taxes in Canada 2023

What’s the deal with crypto gambling taxes in Canada?

So, what makes this such a difficult subject? Well, it’s all to do with how several considerations come together. For instance, we have to understand whether or not gambling is legal in Canada, where and to what extent it’s permitted, and also combine that with the legality of cryptocurrencies, and how these two matters tie into each other. Then, when you add taxes into the equation, well, you end up with a surprisingly complicated question that needs to be taken step by step.

Thankfully, that’s exactly what we plan on doing in this guide. We’re going to take this mighty meal of a subject and break it down into bite-sized chunks of information that are much easier to digest.

The legality of cryptocurrencies in Canada

We want our guides to be as accessible as possible. So, we’re going to have a very quick appetizer before we answer the subject of cryptocurrencies, taxes and the law in Canada.

What are cryptocurrencies?

If you’re so new to the subject of crypto gambling taxes in Canada that you’ve never actually used cryptos before in any capacity, we’ll get you up to speed. They’re essentially a kind of digital currency which is not backed by any government but rather secured by cryptography. This means they can, in theory, be used anywhere and are considered very secure, as they’re logistically very tough to counterfeit. They also have anonymity benefits.

The most popular example is Bitcoin, but there are many others such as Litecoin and Dogecoin, to give a few mainstream alternatives.

However, cryptocurrencies are illegal in some places – China and Iraq, for instance. That’s not the case in Canada, though, with cryptocurrencies being legal in Canada.

This solves the first part of our crypto gambling taxes puzzle, as cryptos must be legal to gamble with, and have the possibility of paying tax on. However, just because cryptos are legal, that doesn’t mean they’re backed by the Canadian government. They’re not considered legal tender. Ironically, considering the subject of this article is crypto gambling taxes in Canada, this means you couldn’t pay your taxes with them. Although they’re legal, they’re not recognised as a currency by the government.

Nonetheless, you can pay for goods or services online with them if a business chooses to accept them. This is not uncommon. In fact, it’s very similar to what you can expect from the likes of crypto gambling sites India. It’s also worth pointing out that cryptos are regularly used in Canada, and in terms of the variety of things to buy or pay for with crypto, the lack of recognition as legal tender hasn’t prevented cryptos from being common in the country.

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The legality of gambling in Canada

So, now we know that cryptocurrencies are legal in Canada. But what about gambling itself? After all, if gambling isn’t legal, then the subject of crypto gambling taxes in Canada becomes something of a moot point.

Firstly, it’s good news because gambling online is legal in Canada. As cryptocurrencies and gambling in Canada are both legal – and there are no additional laws which would suggest using them together would change that fact – this means that crypto gambling Canada is legal too. This also means that there’s the possibility of needing to pay crypto gambling taxes in Canada. However, we’ll clear up the specifics of that issue in our next section.

Before that, we need to cover the legal situation regarding gambling in Canada in a little more depth. It’s important to understand that Canada is a rather unique situation in this regard. Certainly, it’s unique from what you would need to consider when accessing crypto gambling sites UK or much of the rest of the world.

The most relevant place to start is with the change in law regarding single game sports betting in 2021. After this point, individual provinces would be allowed to decide if they were going to permit single game sports betting in their jurisdiction. The first to take them up on this offer was Ontario, which brought sports betting to the masses on April 4th, 2022. This was a big change in the law in Canada because, while previously some parlay betting (and offshore casino betting) was allowed, you couldn’t simply bet on markets as you could in many other countries.

So, now, it’s possible for Canadians to bet on sports and casino games as they wish, but only if the individual province allows it. You should check with your local laws if you’re unsure. Of course, the relevancy of this to crypto gambling taxes in Canada is that if single game sports betting is not available in your jurisdiction, you’re not permitted to bet in this way, making the tax question irrelevant.

Do I need to pay crypto gambling taxes in Canada?

Ok let’s run through what we’ve learned so far. First off, cryptocurrencies are legal in Canada. However, they’re not officially recognised as a currency in Canada, thus are not legal tender – similar to the situation with crypto gambling sites Australia. Furthermore, sport betting is legal in Canada, dependent on the approval of individual provinces. So, you can bet on sports and you can bet with crypto (in approved jurisdictions). But what about crypto gambling taxes in Canada?

Well, the good news is that there are no specific crypto gambling taxes in Canada that we’re aware of. In fact, Canadian residents generally do not have to pay taxes on gambling. The only caveat to that would be if you were a “professional gambler”. This is someone who is making a living from gambling, with an operation built like a business.

Importantly, whether or not you’re a professional gambler is not decided by the amount of money won. That means almost everyone reading this from Canada will not have to pay any special tax on any form of gambling winnings.

Taxes and cryptos in Canada

However, there is a tax consideration which is not necessarily related to crypto gambling taxes in Canada specifically, but is nonetheless relevant if you’re gambling with crypto. Despite cryptocurrencies not being considered legal tender, they are taxable in Canada via income tax or capital gains tax. They are viewed as a commodity, and are taxed as such.

Put simply, in Canada, gambling itself isn’t something most people are taxed on, but the cryptocurrencies themselves are. There are no crypto gambling taxes in Canada specifically, but there is tax to pay generally on cryptos, which is relevant to anyone using cryptocurrencies for just about anything, including gambling.

It’s important to note, however, that this is really just an overview of a very complicated subject. In order to fully understand how much tax you will pay on cryptos individually, it’s best to speak to an accountant. Again, this is the case for anyone engaging in any crypto activity – not just specific to gambling. We’re not financial experts and cannot tell you your individual tax situation, which is why we advise consulting professionals on the matter.

Five things to keep in mind to understand crypto gambling taxes in Canada

If all that information about crypto gambling taxes in Canada seems like a lot to take in, you can understand it with just a few key considerations to keep in mind. We’d say the most vital information largely comes down to the following five points:

Does what I gamble on impact my crypto gambling taxes in Canada?

The only way in which what you gamble on – whether it be on slots, card games, sports betting or anything else – impacts your taxes is how it relates to the way in which “professional gamblers” are judged. For instance, some skill-based games, such as poker, would be more likely to be classified as a professional enterprise. That’s not necessarily the case though. If you enjoy a game of poker every now and again, you likely needn’t worry about it having tax implications for you.

So, the types of games you play can impact whether you’re considered a professional gambler – and that could have an impact on you paying tax on gambling. But this is still something that most people reading this will not have an issue with.

There’s also nothing additional to consider for crypto gambling taxes in Canada. Again, there is no difference in the tax rules for gambling with fiat currencies or cryptocurrencies, meaning you’re in the same situation here however you choose to fund your betting.

Conclusion: Make sure you understand crypto gambling taxes in Canada

There are several things to consider when it comes to paying taxes on crypto betting. However, the core of what you need to understand is rather straightforward – and by breaking it down across the legality of sports betting, cryptocurrencies and taxes, we hope everyone reading this can wrap their head around it in detail. Making sure you pay the proper taxes on cryptocurrencies is very important. And while taxes on cryptocurrencies are generally applicable and aren’t based around gambling per se, they will still be relevant to anyone gambling with cryptos.

On that note, we want to reiterate that we aren’t financial experts, nor do we know your personal tax situation. So, it may be best to get help from an accountant in order to understand all potential crypto gambling taxes in Canada that apply to you. That way, you can focus on what’s important: enjoying all the fantastic operators now available in Canada.

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Crypto gambling taxes in Canada FAQ