Every year at the time of income tax return filing in the Canada, Canada revenue agency provide a solution to different queries pertaining to assessment of income received from contests and competitions.
Each one of us has a different financial situation and rules keep getting revised often. Thus this single article cannot possibly be tailored to match all contexts.You can browse to http://www.highburytaxsolutions.com/ in order to get more information about tax assessment process.
Consultation with a tax professional or at least a person, who can be relied upon to suitably represent you in the case of an audit, is advised.
The method for assessing income from prizes and awards won in sweepstakes, lotteries and similar contests are pretty simple.
First of all, the assessment method varies for these different case scenarios:
- You did not apply/enter into the contest but you were chosen for the prize.
- You applied/entered the contest and then you were awarded the prize.
- In the first case, the prize money need not be added to your taxable income.
- In the second case scenario, the following rules need to be applied.
As per publication 525 of the If a person wins a prize in television or radio quiz program, lucky number drawing, beauty contest, giveaways, sweepstakes, competitions or other events, he/she should include it in the gross income for the year.