December 27, 2019 Featured Articles, Poker News Petr Černý

Canadian tax agency targets high-profile poker players

Several of Canada’s top online poker players have recently been targeted by the nation’s tax authorities in a move that mirrors previous efforts in countries such as Sweden, Spain, and Germany.

Canadian tax agency targets high-profile poker players

Multiple Canadian poker players under investigation

Sammy Lafleur, François Billard, Vincent Jacques, Pascal Lefrançois, and Marc-Étienne McLaughlin were all named in a recent Journal du Montreal article. The true number of players under investigation is at least a dozen according to sources.

Francois Billard pokerIn question is the current and back tax owed by players who have had significant wins, many of them reported publicly on results databases such as PocketFives.

Billard’s lawyer provided the Quebec newspaper with a written response that explained: “The verification concerns the income from his poker game activities; the CRA is investigating whether the way the defendant operates his poker makes his earnings taxable.”

A previous case back in 2013 outlined the criteria the CRA (Canada Revenue Service) is likely looking at in such situations:

(a) the degree of organization that is present in the pursuit of this activity by the taxpayer,

(b) the existence of special knowledge or inside information that enables the taxpayer to reduce the element of chance,

(c) the taxpayer’s intention to gamble for pleasure as compared with any intention to gamble for profit as a means of gaining a livelihood, and

(d) the extent of the taxpayer’s gambling activities, including the number and frequency of bets.

That case, Radonjic v. Canada Revenue Agency, raised some of the standard questions that often plague poker players as opposed to ‘gamblers’ in the traditional sense.

Any ‘system’ that professional gamblers may use is not directly applicable to poker players per se. Radonjic, an online poker player throughout the noughties who actually paid taxes on his winnings to be on the safe side, was successful in his legal action.

The current investigations are much less clear-cut. The onus now on the players themselves, who apparently have not reported their winnings, to prove they are not required to pay tax on them.

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A FlushDraw article on the subject claims that‘the CRA continues to seek “transaction histories, transfers between players and withdrawals and deposits from each of them.”

Previous cases around the poker world have seen jail terms and huge fines levied against players who deliberately failed to report their true earnings.

Spanish-based poker pro Dragan Kostic received an 18-month prison sentence in 2017 for not declaring his €532,000 ($766,438) runner-up cash at the EPT Barcelona Main Event in 2011.

Dragan Kostic

He also received a €400k penalty as well as a back-tax bill of more than €230,000. The authorities had apparently spotted the irregularity in his tax reporting by consulting the Hendon Mob database.

Another Spanish case, also dating from 2011, saw world-class chess Grandmaster Francisco Vallejo Pons hit with a tax bill of over half-a-million euros.

 Francisco Vallejo Pons

The leading Spanish chessplayer and former world number 18 dabbled in online poker, and as he admitted himself: “We go back to the year 2011. Play some online poker, for fun, I’m no gambler…I lost everything, a few thousand and I stopped playing,”

Five years later, his life was upended, Pons revealing. “I get a bill for more than 6 figures! More than half a million euros because you played poker and lost. It sounds like a macabre joke, but it’s not, and at that moment starts a snowball that’s crushing you.”

The Spanish version of the CRA – the AgenciaTributaria – changed the law in 2012 to allow poker players and gamblers to offset losses against their tax burden. This was not applied retroactively, however.

“If you had the bad luck to play in 2011”, said Pons in a FaceBook post detailing his ill-health brought on by the tax demand, “your life may be shattered”.

Last year’s WSOP Main Event winner, Germany’s Hossein Ensan, was another victim of the arcane and rather brutal Spanish tax laws.

Hossein Ensan

The German site PokerFrima reported on Ensan’s trials and tribulations: “The Spanish tax authorities have opened the hunt for German poker players and demand horrendous taxes on poker winnings in Spanish casinos”.

Ensan won €652,667 following a 3-way deal at the 2014 EPT Barcelona Main Event and apparently clarified his tax status on returning to Germany.

The Spanish authorities had a different idea, however, and later demanded close to €235,000 including interest and legal fees.

In the ongoing Canadian cases, which may well expand to ensnare more players, the authorities are also looking at ‘lifestyle indicators indicating lavish income’. In Pascal Lefrançois’ case, that includes ‘the lease of his high-end Audi S5’.

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