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ARE LOTTERY WINNINGS IN CANADA TAXABLE?
In 2024, Canada is celebrating the 50th anniversary of its first national lottery. The so-called Olympic lottery took place in 1974, and it helped raise more than $230 million for the Montreal Olympics. It featured a $1 million tax-free jackpot prize that was the biggest lottery jackpot ever at the time.
Today, Canada continues to provide lottery options to its residents. Those who win these lotteries won't usually have to worry about paying taxes on their lottery winnings, just like they don’t typically have to face taxes on any money earned while playing casino games or taking part in sports betting. Keep reading to learn more about when you will and won’t have to pay any taxes on lottery winnings in Canada.
WHAT TO EXPECT IF YOU WIN THE LOTTERY
Back in 1974, there was only one national lottery offered in Canada. But in 2024, there are three national lotteries, including the Lotto 6/49, Lotto Max, and Daily Grand lotteries.
If you’re lucky enough to win one of these lotteries — the odds of hitting a jackpot while playing the lottery through the OLG is 1 in 33,294,800 — it’s important to know what to do next. Begin by signing your ticket to claim ownership of it and plan to turn it in to collect your lottery winnings before its expiration date.
You should be able to get your hands on your lottery money within about five business days, so you can decide what to do with it next. The decision to spend money, save it, or invest it could play a part in whether or not lottery winnings are taxable in Canada.
HOW MUCH TAX DO YOU PAY ON LOTTERY WINNINGS IN CANADA?
When you hit the US lottery, you might wonder where all your lottery winnings have gone before long, as they will be subject to heavy taxes. You’ll often have 25% of your lottery prize taken by the Internal Revenue Service to pay federal taxes and have to withhold an additional 12% to cover state taxes.
This isn’t the way things work in Canada, as you won't have to set aside money for taxes on lottery winnings as long as you only play the lottery recreationally. There are only a couple of instances in which lottery winners in Canada will end up with money that's taxable. Let’s look at several cases when lottery money is taxed.
PROFESSIONAL GAMBLER WINNINGS TAX
About two-thirds of Canadian adults admit to gambling over the last year. The vast majority are recreational gamblers who won’t need to worry about paying taxes on lottery winnings or other online wagering victories.
However, there are also some professional gamblers incorporated into the mix, and these people will need to pay taxes on any lottery prize money or other windfalls. A professional gambler is defined as someone who relies on gambling-related taxable income to make a living. Pro bettors in Canada are often subject to tax rates that range from 15 to 33%.
If you fall into this category, look into trying to deduct expenses to reduce taxes owed to the Canada Revenue Agency (CRA). It's essential to speak with a wealth manager about tax deductions.
INCOME TAX FROM MONEY MADE WITH LOTTERY WINNINGS
After hitting the lottery in Canada, you’ll be tempted to toss your newfound money into a savings account for safekeeping. While this isn’t a bad idea, you might have to cover the cost of taxes if you have an interest-bearing savings account.
You might also face taxes if you begin investing your lottery prize money in stocks or mutual funds and make profits off your lottery payout through capital gains earned. You might even pay a hefty tax on lottery money if you start a business with them and generate business income and claim business expenses with it.
The tax implications you’ll face when it comes to paying taxes on the interest earned from lottery winnings or the capital gains made by investing lottery money will depend on which province you live in.
TAX LAWS BY PROVINCE
If you're taxed on lottery winnings or money you secure while betting on sports or playing online casino games in Canada, the amount of taxes you pay will change based on your province. Check out this useful chart to see how much money pro gamblers and those who invest their lottery prize money to earn a dividend from companies can expect to pay in taxes.
| Province | Tax |
|---|---|
| Alberta | For the first C$142,292 tax is 10%. In Calgary and other areas of Alberta, the maximum tax is 15% on income exceeding C$341,502 |
| British Columbia | From C$45,654 the tax starts at 5.06% and spans up to 20.5% for winnings over C$240,716. |
| Manitoba | For earnings up to C$36,842 tax is 10.8%, for earnings more than C$79,625 tax is 17.4%. |
| New Brunswick | For the first C$47,715 tax is 9.4%. For amounts over C$176,756, it's 19.5%. |
| Newfoundland and Labrador | Tax is 8.7% for the initial C$41,457, for a sum over C$1,059,000, it's 21.8%. |
| Nova Scotia | Up to C$29,590, the tax is 8.79%. Earnings over C$150,000 are taxed at 21%. |
| Ontario | The taxes span from 5.05% to 13.16% depending on the earning bracket. |
| Prince Edward Island | For the initial C$31,984 the tax is 9.8% and 16.7% for amounts over $63,969. |
| Saskatchewan | Tax is 10.50% up to C$49,720 and 14.5% for amounts exceeding $142,058. |
| Quebec | The tax is 14% for income up to C$49,275, |
LOTTERY WINNERS IN CANADA
There have been many notable lottery wins in Canada since 1974. Now that we’ve gone over when to consider lottery winnings taxable in Canada, let’s work through the five most impressive wins in Canada’s lottery history.
- The $70 million Lotto Max lottery:
Adlin Lewis, a credit risk manager, won the largest jackpot in the history of the Canadian lottery in early 2020. He walked away with $70 million.
- The $68 million Lotto 6/49 lottery:
Noel Patricio, a housekeeper, won the biggest 6/49 lottery prize ever in December 2023. He earned $68 million but claimed he didn’t plan to quit his job.
- The $64 million Lotto 6/49 lottery:
Merel Chiasson, a fisherman, allowed a jackpot-winning 6/49 ticket to sit on his dresser for a year before claiming his lottery winnings in March 2024. He turned the ticket in to win a whopping $64 million.
- The $60 million Lotto Max lottery:
Bon Truong, a landscaper, played the same numbers every day for 30 years and eventually won the grand prize. He pocketed $60 million after spending ten months thinking about what he would do with his winnings.
- The $48 million Lotto 6/49 lottery:
Juliette Lamour, a university student, won one of the largest 6/49 lotteries ever while playing the lottery for the first time. She was just 18 when she scored $48 million.
TAX FREE LOTTERY WINS
Winning the lottery doesn’t always feel like a win in other countries, but it does in Canada since people who win the lottery get to keep every last penny of a jackpot. The only times you'll have to face taxes on lottery winnings will be when you’re a pro bettor or when you use lottery winnings to earn more money on investments.
If you’d like to save lottery winnings without worrying about paying taxes, how about opening a tax-free savings account (TFSA)? If you’re able to open one up through a bank or another financial institution, it could prevent your lottery winnings from earning interest. Find out if you qualify to open a TFSA.
You should also look into opening up a Registered Retirement Savings Plan (RRSP) or a Non-registered Savings Plan (NRSP) to set up yourself and your whole social circle for life. Wealthy people take advantage of these options all the time.
