Poker champion comes up a winner in high stakes showdown with CRA — via financialpost Taxes PersonalFinance
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.
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. Furthermore, he argued, even if the court were to conclude that the game of poker can constitute a business despite the element of chance inherent in the game, poker was a hobby and a leisure activity for him, and therefore his winnings should not be taxed as business income.
Clearly, the CRA disagreed and argued that Duhamel’s poker activities went “well beyond mere entertainment and constitute a business of a commercial nature … particularly following the conclusion of the PokerStars Agreement,” which required Duhamel to participate in future tournaments in order to earn the sponsorship fees.Supreme Court of Canada’s seminal 2002 ruling
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