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Canada is one of the most popular countries among gamblers. Here, unlike many other countries, gambling winnings are tax-free, since the Canadian law rules that the money one wins in the casino is not a constant source of income.
The story of Cheng Xia is very interesting. It starts from 2012, while Xia was working at a casino, as a slot attendant at the Grand Villa Casino in Burnaby, British Columbia.
The Canada Revenue Agency started looking into his case after he did not declare his tips as income. In 2012, Xia earned $39,219 with tips, but his base salary was only $29,327. Even though it was much less than what got with tips, the base salary was the one that Xia declared as income.
As the agency started filing against Xia, he did not hesitate to fight back. He was saying that tips were not a form of regular income and that he did not make any errors while declaring his files. In 2018, he lost the case and appealed to FCA.
After this came the ruling of the FCA, which says that tips of Canada casino workers should be taxed. In response to the situation surrounding the court’s decision, Canada has described gambling winnings as not applicable to tax collection because, as the government says, those winnings are in most cases not a clear source of income.
According to this law, the winnings are tax-free, but if you decide to give part of it to a Casino worker, their tip will be taxed.
Sadly, despite the complete lack of logic behind the tax code, Xia’s case never really stood much of a chance in court. Under the Federal Income Tax Act of Canada, as the taxable income in the country includes the base salary, plus ‘benefits of any kind whatsoever received or enjoyed by the taxpayer.’
A very interesting part of this story is that gamblers mostly tip only when they win huge amounts of money. So, what it means is that the money that was considered to be non-Taxable became very much taxable the moment it was given to a worker.
Xia was fined with $8,411 for ‘gross negligence,’ as the court of appeal decided that the tax-free origins of tip money were meaningless and that the minute it reached Xia’s hand it became taxable.
Taxes for gamblers in Canada
Canada is one of those countries that does not tax gamblers. Xia argued that if the gamblers were not taxed, he should not have been either since the money that he would get as tips were mostly from those who had just won.
According to Canadian law, the only time gamblers can be taxed is when they are professional players. Xia started working at the casino in 1999 and has a great deal of experience in the field.
