Calculators
Are Lottery Winnings Taxable in Canada?
The CRA says a lottery prize is not taxed, but the interest it earns later is taxed. Below: each case in plain words, with what the source says.
1.16 The amount or value of a prize received by a taxpayer from a lottery scheme is not taxable as either a capital gain or income.
Source: canada.ca: income tax folio s3 f9 c1 lottery winnings m (2026-10-29)
lottery winnings of any amount, unless the prize can be considered income from employment, a business or property, or a prize for achievement
Source: canada.ca: amounts that taxed (2026-10-29)
Interest you would report each year
The prize of $1,000,000 itself is not income. Enter the interest rate of your account to see how much interest a year would have to be reported.
How it is calculated
Interest in one year = amount × rate ÷ 100 (simple interest, before tax, no compounding).
This page shows what the sources say and plain arithmetic; it is not tax advice.
Prize vs what the prize earns
The prize itself
- CRA: lottery winnings of any amount need not be reported on your return
- CRA income tax folio: a lottery prize is not taxable as income or capital gain
- Status for a regular player: not taxed
- Exception: income from employment, a business or property, or a prize for achievement
What the prize earns
- CRA: interest you earn when you invest lottery winnings must be reported
- Status: taxed – it goes on your tax return
- For example: prize money sits in a savings account and earns interest
- The prize stays unreported; only the new interest is reported
Cases in plain words
| Case | What the source says | Source |
|---|---|---|
| Win a lottery in Canada | Prize need not be reported; not taxed | CRA |
| Prize money earns interest | Interest must be reported on your return | CRA |
| Prize is a car or house | Its cost is its fair market value when received | CRA income tax folio |
| Daily Grand annuity option | Prizes tax-free in Canada, but annuity option has tax implications | WCLC |
| Gambling as a business | Taxable only if it is a business; lotteries lack badges of trade | CRA income tax folio |
| Retailer sells winning ticket | Prize commission from lottery corporation counts as retailer income | CRA income tax folio |
| Canadian wins in the US | Generally 30% withholding for nonresidents on gross winnings | IRS |
| Prize shared by a pool | Not covered by these sources – ask the CRA | – |
Canada is not on the IRS list of treaty countries whose residents' gambling income the US does not tax.
Words the sources use
- Lottery scheme
- The term the CRA income tax folio uses for a lottery; see the folio for its exact meaning.
- Fair market value
- The price something would sell for on the open market. For a non-cash prize, this becomes its cost for tax purposes.
- Prize for achievement
- A prize given for something you did, such as an award. The CRA treats it differently from a lottery win.
- Withholding
- Tax taken from a prize before it is paid to you.
- Nonresident alien
- The IRS term for a person who is not a US citizen and does not live in the US.
- Annuity
- A prize paid in regular amounts over time instead of one lump sum.
Related pages
Sources
- Canada Revenue Agency – Amounts that are not reported or taxed · checked Oct 29, 2026
- Canada Revenue Agency – Income Tax Folio S3-F9-C1, Lottery Winnings · checked Oct 29, 2026
- IRS – Publication 515 (2026), Withholding of Tax on Nonresident Aliens · checked Oct 29, 2026
- WCLC – Frequently asked questions · checked Oct 29, 2026
- Agence du revenu du Canada – Montants non déclarés et non imposables · checked Oct 29, 2026
- Agence du revenu du Canada – Folio de l’impôt sur le revenu S3-F9-C1, Gains de loterie · checked Oct 29, 2026
- IRS – Publication 519 (2025), U.S. Tax Guide for Aliens · checked Oct 29, 2026
Questions
Do you pay tax on lottery winnings in Canada?
The CRA says lottery winnings of any amount need not be reported, unless the prize counts as income from employment, a business or property, or a prize for achievement. For a regular player the prize is not taxed.
Is interest on lottery winnings taxed in Canada?
Yes. The CRA says any interest you earn when you invest lottery winnings must be reported on your return. The prize itself stays unreported; the interest is taxed.
Do I pay tax on a US lottery win as a Canadian?
The IRS says nonresidents are generally subject to 30% withholding on gross gambling winnings won in the US, and Canada is not on its treaty exemption list. See US lottery winnings for Canadians.
Does a lottery pool change the tax on a prize?
The CRA sources on this page do not address pools. Ask the CRA or a tax professional about your case. To split the amount, use the lottery pool calculator.
Is the Daily Grand for-life prize tax-free?
WCLC says lottery prizes are tax-free in Canada, but there are tax implications if a Daily Grand winner chooses the annuity option. Ask a tax professional before choosing.