No, in most cases, you do not have to report lottery winnings as income, and they are not subject to tax. According to Canada Revenue Agency (CRA), you do not pay tax on lottery winnings of any amount, unless the prize can be considered income from employment, a business or property, or a prize for achievement. For example, if you run a bookmaking business or a gambling establishment, profits from these activities are considered income from a business and are taxable.

CRA defines lottery winnings as “windfall” winnings. This means they are “unexpected” earnings and not income.  Specifically, a winning is determined to be a windfall if:

1. the taxpayer had no enforceable claim to the payment,
2. the taxpayer made no organized effort to receive the payment,
3. the taxpayer neither sought after nor solicited the payment,
4. the taxpayer had no customary or specific expectation to receive the payment,
5. the taxpayer had no reason to expect the payment would recur,
6. the payment was from a source that is not a customary source of income for the taxpayer,
7. the payment was not for property, services or anything else provided or to be provided by the taxpayer, and
8. the payment was not earned by the taxpayer as a result of any activity or pursuit of gain carried on by the taxpayer and was not earned in any other manner.

Almost all lottery and sweepstakes winnings sponsored by charities are considered a windfall and are not taxable.

Can income from lottery winnings be taxed?

Yes, you will have to pay tax on money earned from investing the winnings, such as bank interest or dividends from stocks.

								
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