One of the most interesting differences between Canadian Lotteries and American lotteries concerns taxes. Most of us have heard horror stories about American lottery winners getting raked over the coals by the taxman. Do Canadian lottery winners have to worry about the same thing? For example, if you scored a 6/6 while playing the 6/49 Lotto, what kind of taxes would you be expected to pay?
The answer is going to surprise you. Although it should be mentioned here and now that from that surprise, there are a couple of things you are going to want to keep in mind.
Are Canadian Lottery Winnings Taxable?
If you live in the United States, you are required to pay taxes on your lottery winnings. This comes out to a figure that is somewhere in the neighborhood of a whopping thirty-eight percent! This means that if you won 50-million dollars in a U.S. lottery, you would be expected to pay as much as nineteen million dollars in taxes. While you are still left at the end of the day with a fantastic sum of money, the idea of losing a sizable portion of it right off the bat is indeed the kind of thing that can leave a bad taste in your mouth.
Is the same true for Canadian online lottery winners? If you won fifty-million big ones in the Lotto 6/49, would you have to sink nineteen-million into taxes right off the bat?
As we said before, the answer is going to surprise you. It is also going to please you. That is because when it comes to Canadian Lottery taxes, there really isn’t such a thing in the first place. That’s right. Lottery winnings are not taxable in Canada. Let that fact sink in, and keep it in mind, the next time you step up to play something like Canada Lotto 6/49 online.
However, there is an additional component to this information that you need to keep in mind. Most of us have savings or investments. We understand that these things can accumulate interest over time. That is absolutely fine. Consider the kind of interest you stand to earn on several million dollars from a lotto win, and you are probably started to get really excited. While there is nothing wrong with being thrilled at the notion of making even more money on your lotto winnings, keep in mind that the interest earned on those lotto winnings are in fact taxable. Accumulated interest in a general sense qualifies as taxable income. You will be expected to report it on your returns, and pay the taxes due for the interest accordingly.
Canadian Lottery Winnings And Taxes
At the end of the day, having to pay taxes on something like the interest earned from your lottery winnings isn’t such a bad thing. Keep in mind that the initial winnings are completely protected. The only thing you are paying taxes on is the money you are earning after the fact.
Imagine life as a 6/49 winner, and the prospect mentioned above doesn’t sound too bad by any means whatsoever!