Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
The deductibility of the cost of lottery tickets purchased by a taxpayer in the course of carrying on the business of selling these tickets to customers at a profit and the taxability of winnings on such tickets not distributed or sold to customers.
Position:
Amounts should generally be taxable/deductible as part of business carried on.
Reasons: See above
952488
XXXXXXXXXX Michael Cooke
November 8, 1995
Dear Sir:
Re: Tax Treatment of Lottery Winnings and Cost of Tickets
This is in reply to your facsimile letter of September 19, 1995, concerning the taxation of the aforementioned amounts in the situation outlined in you letter. In your letter you state that you do not believe that Interpretation Bulletin IT-404R, Payments to Lottery Ticket Vendors, addresses your particular situation.
The situation described in your letter relates to an actual fact situation. Questions concerning the proper determination of the income tax consequences of completed transactions should be addressed to the relevant Tax Services Office. Such a determination will depend on an analysis of all the facts, documentation and other information pertaining to the particular situation.
As a general comment it appears to us that if a taxpayer acquires lottery tickets in the course of carrying on its business of selling such tickets all "winnings" from such tickets would represent business income to the corporation. The cost of these tickets, which would either be sold at a higher price or held by the corporation in connection with the draw, would be a deductible business expense of the company.
We trust that our comments are of use to you.
Yours truly,
F. Lee Workman
Section Chief
Financial Institutions Section
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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