Pat posted this question on Taxes on Winnings: Why do Canadians have to answer a skill-testing question? Does not make sense to me…
The explanation for this question is so detailed I have an entire section dedicated to it in my upcoming book. I will give you a shortened version here.
The reason we must answer a skill-testing question in order to win in Canada is; sweepstakes are illegal. Yes, I said illegal. Sweepstakes were made illegal to protect Canadians from scams.
Companies wanted to use giveaways in their promotions and advertising as they are a fantastic marketing tool, but couldn’t. A brilliant lawyer found a loophole in the law.
Contests were not illegal so if the entrant exhibited a form of skill, the promotion would be legal. Therefore, we answer a skill-testing question making the giveaway a contest and not a sweepstakes.
It’s been more than 200 years since the original law was put into effect, so I don’t think it will be changing anytime soon. Keep your calculator handy!
If you have a sweepstakes, contest or giveaway question, please email me.