CANADA Law and Practice Contributed by: Danielle Bush and Matthew Kelleher, McCarthy Tétrault LLP
12. Tax 12.1 Tax Rate by Sector
operators of gaming throughout Canada, there is no major history of financial penalties. Ontario is, again, an outlier at least with respect to online gaming. Sig- nificant (by Canada’s standards) monetary penalties have been levied against online gaming operators who breached the strict advertising standards set by the AGCO. The operators in question were sent a commu- nication advising them of the non-compliant advertis- ing and ordered to remove it without delay. Operators who did not manage to get the ads removed within a narrow 24–48 hours were fined. To date, it is under- stood that none of them have appealed the fines. There is no clear means of calculation but, in Ontario currently, the fine for each individual non-compliant advertisement is approximately CAD12,000.
The lottery corporations are taxed on the revenue that they generate as the legal operators of gaming in their respective provinces. They flow the tax through to their gaming contractors by deducting it, as well as many other charges, from the amount that is paid to the contractor. The tax rate payable by the lottery cor- porations varies from province to province. In Ontario, the tax rate for online gaming is 20% of gross gaming revenue, which is paid by iGO to Ontario’s Minister of Finance, then flowed through to the operators as a revenue share. Each operator must set up a separate bank account (not necessarily in Canada) into which they deposit all of their gross gaming revenue from their Ontario site on a weekly basis. At the end of each week, the operator transfers all of the funds in the account to an iGO account. iGO then deducts 20% and returns the resulting net gaming revenue to the operator’s account.
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