Lottery prize commissions

Lottery ticket retailers who sell winning tickets must include in their income the amount or value of any prize commissions they received from a provincial lottery corporation on or after January 1, 2014. For more information, see Lottery prize commissions.

For years, the Canada Revenue Agency (CRA) held the position that any commission or prize received by lottery ticket retailers from a provincial lottery corporation for selling a winning ticket was not taxable. This position was outlined in Interpretation Bulletin IT 404R, Payments to Lottery Ticket Vendors.

Repeated concerns over the years about the fairness of this position prompted the CRA to review it. Concerns centred on the fact that generally, as explained in Interpretation Bulletin IT-334R2, Miscellaneous Receipts, prizes or commissions a taxpayer may receive from carrying on a business are indeed taxable. Upon review, the CRA concluded that treating prizes paid to lottery ticket retailers as non-taxable led to inconsistent treatment between taxpayers. As a result, the CRA cancelled Interpretation Bulletin IT-404R on December 31, 2013.

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