“Your world has taken a wonderful turn!”
“Lady luck has thrown her glance your way!”
“Congratulations! You’re just become the lucky winner of a fantastic sum of money!”
Words we all dream of hearing – which happen to be part of the publicity material given by Loto-Québec to all our province’s big winners. The pamphlet is titled, “It Doesn’t Really Change You, Except…” If you are like 65 – 75 per cent of Québecers who purchase at least one Loto-6/49 ticket per year, then chances are you too dream of hitting the jackpot, and everything that, “Except…” promises. But what really happens when you win the lottery?
Jean-Pierre Roy, Director of Media Relations at Loto-Québec, estimates an average of 50 lottery tickets in Québec each year win over a $1 million. That’s a nice chunk of change – once you pay the taxes, right? Actually, no – contrary to popular belief, lottery winners in Canada (unlike most countries) pay no tax on their winnings. So, if you win $1 million, it’s yours to keep. Sounds too good to be true, right?
“Anyone who wins a huge sum of money is going to be speaking with financial advisors right away,” says Sabrina Kopach, of the Royal Bank. “And you can bet that as part of building a solid portfolio, they will be putting some of the money in trusts, and some in stocks and other investments. Then they will have a certain amount per year released to them as a living income.”
And there’s the catch. If someone who wins $20 million decides to access $80 thousand per year to live on, they must pay income tax on that money. Likewise, if stocks are sold or investments yield returns, taxes will also be paid on the profits. “One way or the other, the government always collects,” says Kopach.
What are the biggest mistakes commonly made by lottery winners? If you think foolish indulgence and extravagant purchases, you’d be wrong.
Although this stereotype was truer in the 1970s and '80s, now, Roy says, “People reflect the times they live in. In the past, we saw more reckless spending, but now winners have more practical concerns. Bigger questions, such as, “Do I keep working? Do I move? Whom should I give money to?” take precedence these days.”
So, with a solid financial plan you should be ready to enjoy your new life of luxury, right? Not so fast. There is one other part of winning the lottery you may not know – once you win big, Loto-Québec reserves the right to publish your name, photo, and personal information, and that can lead to unwanted publicity.
One Montréal couple won $27 million and found themselves the targets of a foiled kidnapping in 2007 after a burglar tracked them down using the phone book. Loto-Québec now graces winners with a 10-day period to install a home alarm system and get an unlisted number before their win is made public.
But the bad news might not stop there – just yesterday, a Toronto man was arrested after winning $4 million, based on outstanding warrants from 2003. Police recognized him from the photo he took with his winning cheque. So, before you dream of winning the lottery, remember that crime doesn’t pay.
