What are the taxes and fees at Canada Lotteries?

Whether you play Canada lotteries in any part of Canada or even from the US, there are certain things to note about prizes, taxes and fees.  In Canada, lottery winners don’t need to pay any fees to Canadian authorities on their lottery winnings. Also no lottery in Canada will never ask lottery winners to pay any advance or upfront fees to anyone at any time or for any reason. As a winner, you will never need to pay to get your winnings.

Also if you are international residents and playing lottery in Canada you should note that all prizes are paid in Canadian currency. Note that international residents don’t need to pay income tax to Canadian authorities on their lottery winnings.

So lottery winnings aren’t considered taxable for Canadian income tax purposes.

US lottery players

U.S. tax laws around lottery winnings are different than Canadian laws. If you’re a resident of the U.S. and you’ve won, you need to get in touch with a tax professional.

Also winning lottery ticket from an authorized retailer in Canada that don’t live in Canada you have two options to claim the prize that you have won.

You need to attend the Canadian lotteries Prize Centre in person like for OLG you need to come to Toronto.

If your prize is under $10,000, follow Canadian lotteries Claiming Your Prize by Mail instructions. If you live in the U.S., you need to include a Canadian address so that they can send your cheque to that address. Also you need to provide your U.S. address.

If you’re living in the U.S. and you’re claiming a Canadian lottery prize, keep the following things in mind.

Canadian lotteries never uses third parties to locate or pay its winners.

It is their policy not to mail any lottery-related materials, including prize cheques, to the U.S. It is contrary to U.S. laws and postal regulations for an entity which operates lotteries to knowingly deposit in the mail, or send or deliver by mail to the U.S., any letters or packages concerning a lottery, and/or any paper, writing, or other device used, to be used, or adapted, devised, or designed for use as an integral part of conducting a lottery.

As well, it is the Canadian Lotteries policy not to wire transfer prize payments to winners in the U.S., or transfer prize payments by any other method to the U.S. that may have the appearance of trying to bypass or circumvent U.S. postal regulations and legislation. If you have any questions about the application of U.S. postal regulations to Canadian lottery winnings, Also get in touch with the United States Postal Service.

How Canadian Lotteries Are Structured Financially

Canadian lotteries like Lotto Max, Lotto 6/49, and regional draws are typically operated by government-owned entities such as the Ontario Lottery and Gaming Corporation (OLG), Western Canada Lottery Corporation (WCLC), and Loto-Québec. These organizations are non-profit in nature, and the revenue generated from ticket sales is distributed as follows:

• Prize Pool: A significant portion is allocated to player prizes.
• Government Programs: Net proceeds go to public initiatives like healthcare, education, and community programs.
• Operating Costs: A smaller share covers administration, marketing, and retail commissions.

Importantly, lottery corporations do not deduct taxes or fees from your winnings. This structure ensures that players receive the full advertised amount if they win.

What Happens the Moment You Win?

When you win a Canadian lottery:

1. Validation: Your ticket must be validated either in-store or via the lottery corporation’s official app or website.
2. Prize Claim Process:
   • Small prizes (typically under $1,000) can be claimed at authorized retailers.
   • Larger prizes must be claimed through regional lottery offices.
   • Very large wins may involve in-person interviews and public announcements.
3. No Fees Required: Legitimate Canadian lotteries never ask winners to pay processing or release fees. Any such request is a red flag for a scam.
4. Privacy and Publicity: Lottery corporations may publish your name and photo. Some provinces allow winners to request anonymity under specific conditions.

How Much Tax Do You Need to Pay on Lottery Winnings in Canada?

Zero. Canadian lottery winnings are not taxed, as they are considered windfalls rather than income. Here’s what you need to know:

• No Federal or Provincial Tax: Whether you win $1,000 or $50 million, you keep the entire amount.
• No Need to Report: You don’t have to report your lottery winnings on your personal tax return unless it’s related to employment or business.
• Gift Sharing: If you gift part of your winnings to friends or family, neither party owes gift tax—because Canada has none.

But there are exceptions and important caveats:

Category	Taxed in Canada?	Notes
Canadian Lottery Winnings	No	Full amount is tax-free
Gifted Winnings	No	No gift tax involved
Investment Income	Yes	Earnings from investing winnings are taxable
Non-Cash Prizes	Sometimes	Taxable if linked to work or business
Professional Gambling	Yes	If gambling is your primary income, it may be taxable

In short, while your winnings are tax-free, what you do with the money, like investing it, can create taxable income.

What if a U.S. Citizen Wins a Canadian Lottery?

While Canada won’t tax a U.S. citizen’s lottery winnings, the United States will. Here’s what happens:

• Canadian Side: You receive the full amount, as Canadian lottery corporations do not withhold taxes from non-residents.
• U.S. Tax Obligation: The IRS considers lottery winnings as taxable income, and you must report the full prize on your U.S. tax return.
• Withholding & Rates: You may need to pay up to 37% in federal tax, depending on the size of your winnings and your total income.
• State Taxes: Some U.S. states may also impose state income taxes unless you live in a tax-free state like Florida or Texas.
• Foreign Tax Credit: Not applicable here, since Canada doesn’t tax your winnings. So, you must pay full U.S. taxes.

U.S. residents playing Canadian lotteries should consult a tax professional to understand their total obligations and avoid surprises at tax time.

Claiming Prizes for Non-U.S. International Residents

Canadian lotteries’ current practice is to mail prize cheques, when requested, to international mailing addresses, with the exception of addresses within the U.S. OLG cannot guarantee the safe or timely delivery of such mailings. Winners who request mailed prize cheques to international addresses do so at their own risk.

As said above you can give Canadian lotteries corporation a Canadian address where they can mail your cheque.

FAQs