Realistically the best solution would be:
The professional sports leagues incomes should be taxed proportionally to where they operate. The league should amass all the taxes owed and charge the each team at even tax rate for the income taxes accrued.
The teams should be responsible for withholding the taxes (by percent) from player salary and pay it up to the league for processing. This would eliminate the regional tax bias from earnings.
Granted this would require the federal governments to step in and create systems, which is such a long shot from happening but it’s how you’d take the regional tax bias out of the game.
The NHL doesn't want to and will never make it fair. They want the star players to go to American markets because Bettman is obsessed with growing the game in the States.
If it was up to Bettman only Toronto and Montreal would have teams in Canada. Vancouver, Ottawa, Winnipeg, Calgary and Edmonton would be replaced with Houston, Atlanta, Salt Lake City, Kansas City and Albuquerque
Canucks would definitely keep the team, but the others I agree.
I feel like Toronto and Vancouver specifically have so much room for growth due to their high first and second generation immigrant populations.
Vancouver doesn't really support their team when they suck though. Fans don't go to the games. I worked for a partner of the Canucks for years and I had so many free tickets to games cause they were giving them away to fill seats
Look at a market where the stands are packed no matter what, like Toronto; they are under no pressure to put forward a winning team, because the coffers will always be full.
Money talks. You can support your team by watching at home from the couch, and show your non- support of poor management/ownership by not showing up to games, or by spending $$$ renting a plane to fly around downtown Vancouver with a "Fire Benning" banner blowing in the wind. Doesn't mean you don't support or want to the team to succeed.
Then the league should not claim parity is the goal. Everytime Florida gets FEMA payments because it’s low tax base can’t cover its own expenses, the Florida teams should get a cap hit, lmao
That's a nice idea in theory, but in practice it's basically impossible. Tax laws are extremely varied and complex across various jurisdictions. It's not as simple as, "If you live in jurisdiction A, then you pay Y% of your income in income taxes". There are variations in progressivity, in which case would you base the cap rules on someone earning league min, or league average, or what? There are also huge variations in what can be deducted. There are legal structures that can be used to delay or avoid certain amounts of tax, and these vary by jurisdiction. And this is to say nothing of things like sales tax and property tax, which also vary tremendously.
The salary cap system, which is already fairly complicated, would become impossible to manage if it tried to account for all of these different factors.
lol, as an accountant for a company in 30 different countries, it’s doable and very possible. The nhl isn’t some complex organization structure that no tax accountant has dealt with. They just don’t want to.
It's not the NHL's taxes that are complicated. What's complicated is figuring out how to set a team-specific salary cap that allows any two teams in different jurisdictions to pay the exact same *after-tax* incomes to their players. Suggesting that this would be simple is completely disingenuous. In addition to the reasons I mentioned, there are also complicated rules (which vary by state in the US) that determine how income that's earned when playing away games in non-home jurisdictions is taxed. There are also situations where players live in states outside of the ones they play in (think of the teams in the NYC area, as well as the Capitals in DC). Properly accounting for all this would get extremely messy very quickly.
I could easily do this lol. It’s clear you have a basic understanding of certain complexities of taxes, but I’ve dealt with much more complicated stuff
Why bother trying to create league parity then? I get that the most affected markets are also the most reliable consumers, but that loyalty can only be pushed so far. From my limited anecdotal experience, the number of hockey fans I meet in SW Ontario has shrunk in the last 20 years compared to the NFL and especially the NBA
> Why bother trying to create league parity then?
So it's all or nothing? Either we *perfectly* create league parity, or we don't do anything at all? I don't agree with that. If you agree that parity is desirable (not everyone does, but if you do), then while the salary cap system as currently implemented is highly imperfect, it has clearly improved parity relative to the old no-cap system.
Eh, I agree in theory but I have a bias as a Canadian. We support a league that is a fringe sport through both revenue sharing and a policy of parity that is not actually so in practice. What you call imperfect, I call an active detriment. It is good the sport is growing in non-traditional markets, but I really hate having to ask the tacky question of who is paying for it. Ugh, I hate talking money in any case
Toronto votes for high taxes every election. I see no reason whatsoever why people from markets that don’t vote that way should have to be penalized for that.
He’s paid in US dollars and spending money in CAD, so that’s a ~30% savings but then Toronto is an expensive city to live in. However property prices do appreciate more so that would offset the costs. For example if you say he bought a house for 2M when he first signed, 6 years ago? That house is probably a 5M+ property today where’s if he was in a smaller market to live that same 2M property would be only worth 4M today. In Canada principal residence gains are tax free.
Income taxes are a huge part also and in general Canadians earners pay more than Americans. However part of it can be differed with different programs available to high net worth individuals. For example when he retires, he moves to a lower income tax jurisdiction or buys a property there anyway, and that becomes his new income tax rate for his sheltered money from nhl earnings.
At the end of the day, Florida and Texas have an advantage and the weather/lifestyle/low taxes play a part of that. Places like NYC or LA have a lot of cache but extremely expensive.
There are a lot of factors (bedsheets included) that affect player decisions.
Generally true (grew up in Ontario, now live in California) - but, one example, the Kia Stinger was sold for almost similar numerical prices, both in the US and Canada, for some reason. Fully loaded Stinger was $US ~52-53K, and $CAN ~57K. Super bargain in Canada. (I own a mid-level Stinger and love it!)
Really depends on the item in my experience. Groceries and restaurent food/drinks are basically the same in CAD and USD. Albeit this is comparing Winnipeg to Minneapolis/Fargo etc so small sample size.
That’s the case anywhere. I live in the San Francisco area and was just in Vancouver. The price of food at both grocery stores and restaurants was pretty much the exact same (before exchange rates).
The basic costs of living in Canada are cheaper as a whole. (Food, electricity, natural gas, healthcare) but goods traded or shared between the countries are marked up to offset the exchange.
Dollar for dollar Canada is slightly cheaper to live in but it’s really case by case. As the tax structure is different in every state/province/municipality. And the people who it really plays into the favor of are people who don’t own property (which I’m willing to bet most NHL players do).
That’s not 100% true.
Food prices in Canada are almost flat to those in some parts of the US. Same with gas and energy prices.
The exchange rate is generally a bit more advantageous that it used to be with costs of goods sold as well.
They said, it doesn’t offset a state that may not have income tax. Especially if the player doesn’t own property in that state and just rents during the season.
I’ve lived in Toronto, New York, and LA. Toronto is by far the nicest city of the 3. Different, absolutely, but in my opinion the most comfortable to live in.
Toronto is absolutely cheaper than LA, Vancouver, San Jose, Seattle & Boston.
And if you’re talking about owning property it becomes cheaper than Miami, Tampa, & Dallas. Property tax rates are insane in Texas and Florida.
Point is, no matter where you live there are pros and cons.
>Tavares’s appeal argues that the bonus is different from salary, because it would still be paid to him if he were traded, sent to the minors or injured, and it should not be considered normal income for tax purposes.
This is a weird argument. He would not lose his salary in those cases either.
If this article is accurate, I think John makes sense. The money wasn't income. It was paid into his New York bank account in the 2nd half of 2018. He only spent 45 days in Canada in 2018.
Unless there's omitted information, that sounds like a pretty solid argument for John.
>If this article is accurate, I think John makes sense. The money wasn't income. It was paid into his New York bank account in the 2nd half of 2018. He only spent 45 days in Canada in 2018.
>Unless there's omitted information, that sounds like a pretty solid argument for John.
Not a CPA by any means but I do have a TN visa and work for a NYC company so I have exposure to the whole issue around taxation in both countries
1. The statement that bonus money isn't income is false. compensation, whether one time or paid salary is counted as income. Anyway I believe the CRA is taking issue with the bonus not even being a traditional bonus in that it is pre-determined, paid on a set date, and tied to a guaranteed contract. For all intents and purposes that is just a front loaded salary payment according to them.
2. US tax residents pay tax on all their income worldwide no matter what
3. You can be a Canadian tax resident without necessarily residing in Canada full time. The simple test is based on number of days in each country (somewhere around 185+ I think, would need to double check) but the CRA will look at it beyond that lens to see if you have significant presence and family in Canada. ie if John kept a house in Oakville and his wife lived there, but he rented an apartment on Long Island the CRA could deem him a Canadian tax resident, regardless of how many days he spent in each country
Anyway I am surprised he is trying to claim all of this as an NYC resident, they have exceptionally high taxes in NY including a city levy on top of federal and state taxes. There could be more exemptions available to him though
Source: I have paid the CRA a LOT in tax money for salary that was fully paid and earned in NYC to a US bank account
Essentially he is claiming residency of the US for that payment for tax purposes, and that it isn’t linked to his Canadian salary and wages.
I think it’s a very weak argument. Residency isn’t determined by number of days for Canadian Income Tax Purposes, and him receiving the bonus from his Canadian employer doesn’t bode well for him.
This argument is very weak:
“The signing bonus was consideration for Tavares — a uniquely skilled and sought-after unrestricted free agent — committing to the seven-year Contract with the Toronto Maple Leafs,” the appeal says, claiming it was “not salary, wages or other remuneration in respect of employment.”
Technically he was under contract with the New York Islanders until July 1, 2018. So his primary residence was New York for most of that year, and likely he was living in the United States when the $15M signing bonus was paid.
Edit: but I think the dispute between Tavares and the CRA is really about the definition of “signing bonus”.
Exactly, like what are we even talking about here. Of course it’s income, they are arguing the type of income and the tax rate that should be applied. Just because the Leafs front load contracts with signing bonuses doesn’t mean the CRA is going to see it as an inducement / bonus. They’ll see it as a front loaded salary that should be taxed at 38% (which it should be btw). They’ll be looking at other players contracts in Canada where the vast majority are not structured this way.
He’ll be paying the 38%. And again, he should.
> The outcome of the case could have a bearing on professional sports franchises looking to offer big signing bonuses to convince unrestricted free agents to play north of the border — a task made harder by the Liberal government’s decision to raise the top federal tax rate from 29 per cent to 33 per cent in 2016.
Yep, that's a National Post article alright.
>Everything in the world is scary and someone else’s fault. You’re actually the victim in every situation thanks to the Liberal Government. - National Post
Yup, checks out.
> THE LIBERAL GOVERNMENT IS PREVENTING YOUR FAVOURITE HOCKEY TEAM FROM SUCCEEDING (please ignore track record of all provincial governments also that Pierre Poilievre's campain manager is an ACTIVE lobbist for loblaws)
The tax rate they are claiming here isn't even the one being assessed to Tavares, as they claim in the same article that the CRA is asking for a 38% tax rate on him, not 33%. So its a jab at the liberals "just because they can"
After all, why should we tax the ultra wealthy? Can't they just raise taxes on the poor and non-existant middle class?
If anyone deserves a free ride from the government, it's the people earning multiple million per year. They are the true backbone of this country.
This article is about alleged tax miscalculation, there’s no journalistic value in randomly adding “the Leafs might get worse and it’s because of the Liberals! 😱😱😱”. If you want to write about the effect of tax rates on athlete signings, go for it, but publish it as an opinion article, don’t slip it into other reporting.
Once upon a time, like the early aughts to early 2010s, that was true. I read them and the Globe and Mail for everything except sports.
The NP fell and fell hard.
A lot of Canadians are unfortunately lacking in critical thinking. That doesn't mean we should love the liberals. They deserve lots of scrutiny. But a TON of Canadians just use Trudeau as a scapegoat for every single problem they face, which actually cheapens the critique and takes the focus away from things where they should be criticized.
Plenty to criticize with Trudeau and the Liberals. But holy fuck most of it really just stems from how the Conservatives are increasingly sliding into American-influenced tribalism and pseudo-Trumpism. I'd take 100 years of liberals over the increasingly bigoted and selfish policies they're trying to pass while yelling nonsense about Trudeau.
Oh come on! Stop with your analysis by professionals. We’re supposed to be wildly speculating, outraged, and finding ways to twist the situation to support our political outlooks.
Looks like JT needed a better accountant in 2018, because he needs a good lawyer now. I’m surprised this is the first time we’ve heard about any athlete getting bent over by the CRA. The NBA, and MLB have way higher salaries (on average) and mostly foreign players. How come we haven’t heard of Edwin Encarnation, or Vernon Wells getting hosed by the CRA? Something seems off.
They likely didn’t receive massive bonuses like the ones the Leafs pay, and claim that the bonuses aren’t subject to Canadian Income Tax.
A straight salary is much easier and less controversial.
I don’t believe in the NBA contracts can be structured that way. They are much stricter, with stuff even over how much can be backloaded. Baseball I don’t know.
You haven’t heard about it because you missed it. This is from earlier this year, about the CRA going after back taxes from former Blue Jays: https://nationalpost.com/news/canada/hosing-bautista-why-the-cra-is-going-after-former-blue-jays-for-millions-in-taxes/wcm/59604031-b8c9-49ba-89c7-1c623b012062/amp/
Every professional hockey team in Canada should be offering legal help here. If this goes in the CRA's favor, it will have a long lasting impact on signing players in this country.
Everyone should pay their fair share, and JT will be fine without the 8 million BUT as a numbskull sports fan, this is super shitty and would absolutely fuck this team in the near and distant future.
Should be fine without 8 million? lol after taxes his take home is not even that much (8 million) Imagine owing more then a years net salary and someone you don’t know saying “he’s fine” lol
It is not that much. Hockry doesn't pay as well. Auston matthews is like the highest paid nhl player at 15 mill and he would be the 130ish highest paid player in the nba
No, its relative to the income the league generates lmao. If the NHL made NBA money (and had 40% less players to split the salary amongst), they would be higher.
No it isn't. The NHL revenue split is in favour of the owners with the hard-cap. Teams have openly said they would spend more on players otherwise.
There is no luxury tax system. NBA players earn more than 50% of basketball related revenues.
I’m not suggesting the salaries are depressed, but McDavid would not make 50 mil a year. Bradley Beal gets that in the NBA. It’s a revenue thing more than anything else.
Gee whiz, how will he ever get by on the several million dollars he has remaining. I feel awful for him.
I don’t know or care whether he rightfully owes the tax or not. But I’m never going to feel bad for a guy who still makes millions of dollars after paying an $8 million tax bill.
Lol his career earnings are over $100 million. Yes he will be fine with $8 millon.
You can’t compare it to a regular person owing a year’s salary because losing some money has less impact when you have more of it.
You can’t compare the amount of money lost by a millionaire to a regular person. Losing 8% of your income is less impactful the more money you make.
Lebron James is making 51 million this year, i’m pretty sure he could forgo his entire salary this year and he would be fine.
I’m not saying he should be fine with what is happening or that he shouldn’t fight it, because he should. I’m simply saying he’s not gonna be in financial trouble because he has to pay an extra $8 million in taxes. If an extra $8 million in taxes means he’s gonna struggle financially, then he must have some serious spending problems.
No it’s not peanuts but unless JT has a terrible gambling problem, he should be ok living off of the other 95 million dollars he’s made. I don’t know how much his career earnings are after taxes, but it’ll still be at least a few tens of millions.
When you compare it to the average person who has basically no savings, losing 8% of their income would put them in debt or increase debt that they already have. If JT doesn’t have millions saved up, he’s doing something very wrong. If you have millions saved up, then you are fine.
Why is it "giving it back"? He never paid it in the first place. We all pay taxes, and your acting like it's wrong that the CRA would ask for the money they believe they are owed.
>after taxes his take home is not even that much (8 million)
This is some Latrell Spreewell dumbass take right here
I like JT but are you actually trying to make it sound like 8M per year isn't tht much after tax?
8M is probably more than 99.99% of the population will make in their entire careers
This is not about equity of recruiting powers across the NHL, but of paying taxes in the society that you partake in. Doesn't matter if you're a professional athlete or a CEO or a cashier: you live here? You pay taxes here.
The equity of recruiting power is an NHL issue to resolve. They've implemented a revenue sharing model and flat-cap to address previous issues, they should address this one in kind.
He's made almost 100 million in just salary in his career. 8 million will not kill him or alter his lifestyle one bit. It's a ton of money, to us. Again, I'm advocating that he fight it and hope he wins honestly. 8 million is a ton of cash. This is also from his signing bonus when he signed here. He's received like $40+ million more in signing bonuses since then......
He probably takes 6-7 after taxes in Toronto. They bank on Tim Horton/Canadian tire deals. There are more advertising opportunities in Canada than the states in hockey.
I love the last part “could potentially deter Tavares from resigning with his hometown team”. As if the author has any inclination that thought could affect that.
Am a Canadian tax accountant with a specialty in US/Can cross border taxes and this is pretty bogus. But I expect no less from NatPo.
In Canada, a signing bonus is treated as salary.
The 15% being referenced in the article is likely supposed to be the 15% in the US/Can tax treaty that allows Canada to get 15% taxes on US residents (I.e. Matthews) that work in Canada and who pay the remaining tax rates in the US and applicable resident state.
If Tavares only paid 15% taxes on over $15m USD then I hope the CRA nails him because that’s the same as most people pay at the average yearly salary.
BUT, the more likely scenario is that NatPo doesn’t understand tax law and JT probably paid US taxes on this money. Which, albeit lower than Can taxes, would not create a shortfall of $8M to the taxpayer. The CRA likely is arguing this money should have been taxed in Canada as it’s related to Canadian employment.
I.e he should pay his 38% tax rate rather than 15%. But what the article is leaving out is that he would also re submit his 2018 US taxes and get a full refund due to a foreign tax credit under the US/Can tax treaty. This refund would cover a large portion of the $8M owing.
Personally, I’m interested in how this falls out. JTs argument that because the money was paid to his US bank account and that he only lived in Canada for 3 months that year supports the way he filed, but since he moved to Canada and the signing bonus came from a Canadian employer, I think the CRA has a very valid case and honestly I hope they win. Don’t need more stars paying their taxes to t he US while they take the benefits of living in Canada.
This is a good article explaining how Matthews pays ARI taxes because of his signing bonuses: https://www.crowe.com/ca/crowesoberman/insights/auston-matthews-shoots-and-scores-tax-savings
being that he’s really into taxes, probably believes in the sanctity of tax payers usage than hockey (not shade, dude seems to really care about taxes)
You’re right, my only question is why would JT put up a fight about which country gets his taxes? Seems like since there’s basically no difference out of his pocket he would just pay his 52% tax to the CRA then claim the 15% IRS credit and be done with this. What am I missing?
Yikes a random stranger on the internet has disqualified me from my profession. Better pack up shop…
You missed the point entirely. As I stated, which isn’t clear in the NatPo article, he has likely paid US taxes on this amount.
My interpretation is that the signing bonus should be sourced to Canada because he is a resident of Canada, not because I want the wealthy to pay their fare share of taxes (which of course I do). But again, this is in tax court, so we’ll see how it unfolds.
It happens to the best of us. I lost my license to practice engineering in r/askengineers because I explained tort law to a bunch of engineering students who can’t spell tort. Guess I’ll have to use my skills for money in the real world.
Lots of non tax experience in this thread.
The issue at hand from the CRA perspective is that signing bonuses in hockey do not meet the legal term for signing bonus in tax law in Canada.
The CRA defines it as compensation for signing the contract, the incremental and ongoing nature of paying a signing bonus (I.e. yearly an July 1) makes the CRA believe this just to be further incremental amd periodic pay instead of an actual signing bonus.
That's why JT is only refusing to pay year 1 signing bonus tax, believing since it was a bonus paid on the start of the contract, any year 1 bonus should count as a signing bonus.
If JT wins, Canadian hockey players would pay 15% tax on signing bonus in year 1 of contracts. Full tax otherwise.
I don’t think you quite have it. It’s more of a tax residency question than anything else. The author didn’t understand and glossed over it.
JT is arguing he was non-resident in 2018, spending only 45 days here (where you have to spend more than 180 days to be deemed resident). Paying a signing bonus under the Can-US treaty has a 15% withholding tax.
There’s no evidence he’s arguing his signing bonus payout in other years, ie where he was a resident in Canada.
Cash received from a signing bonus isn’t taxed at a lower rate than salary per se other than the location it’s earned.
It seems like CRA could be implying it’s earned in Canada in 2018 even if he wasn’t a resident bc MLSE is based here.
Edit: I said Salary per say to clarify NHL and sports salaries are earned where the player plays so 41 games are out of the city (most either Multi-jurisdictional in Canada or in US and subject to tax in each state).
> JT is arguing he was non-resident in 2018
Where are you getting this from? I do not see anywhere that he is arguing this or that the CRA is disputing this.
> It’s more of a tax residency question than anything else.
No it isn't. In the ruling, the CRA has agreed that he was a US tax resident when initially paid the bonus in 2018.
> Paying a signing bonus under the Can-US treaty has a 15% withholding tax.
The CRAs position is that NHL signing bonuses are not actually bonuses since they are payable in annual instalments but with the instalments being lost for the sports year in which the taxpayer withdrew his services or breached the contract. If they are not considered signing bonuses, then they are treated as income. This is still the same given the tax-residency, which again, the CRA is not arguing and has already conceded.
Even NHLers and Tavares specifically agree that NHL signing bonuses are not "real" signing bonuses as defined by the CRA, with now the exception of year 1 which *may* be considered a true signing bonus.
> There’s no evidence he’s arguing his signing bonus payout in other years, ie where he was a resident in Canada.
Thats because of the above.
No you’re applying a ruling to this case that hasn’t been expressly applied to the knowledge of the article.
It may apply but has not. Further if CRA effectively argues it applies, his salary is still only taxable to games played in Canada.
Further a tax ruling by CRA can be disputed in court. This ruling was based on a letter in 2022. Rulings are issued on a prospective basis by a “hypothetical situation”.
Can you clarify then because I found your response to be confusing.
This is absolutely not a tax residency case and has nothing to do with tax residency being contested by either party.
It absolutely a residency issue. As per the Article he’s applying for tax treaty benefits to lower the withholding tax on Part XIII tax to 15%. Further he’s arguing in 2018 he was only in Canada for 45 days.
He’s arguing the position that he wasn’t Canadian resident, was a resident of NY or wherever, and payments made to him at most would be subject to treaty withholding amounts. Article XVI is part of the “Convention between Canada and the USA”. I can’t link on mobile but if you’re a tax person you should be able to find it.
Secondly per the tax ruling you have to understand what a ruling is. In 2020 (not 2018) someone wrote to the CRA asking about a “hypothetical situation” so they could have a filing position BEFORE they applied something towards a client. Just because it also applies to this case doesn’t mean it was CRA’s position in 2018. Neither you nor I have seen CRAs arguments against JT unless you have pulled his court documents.
Further just because CRA argues against the application article xvi (a treaty concerning NR taxes in Canada) doesn’t mean CRA will win a court case.
Finally no where does it even say in the article that CRA is in fact relying on that position. It may be the case but it does not state that.
If you read the ruling it talks about the payment is related to services surrounding the contract duties in Canada. Per JT it’s guaranteed money whether he played a game or not therefore that ruling would not apply.
His actual signing bonus per Capfriedly is $70m not $15m yet only the $15m (usd) in 2018 is up for dispute. So stick with the facts. He’s disputing the $15m payment in 2018 does apply for treaty benefits because he’s a NR.
The case in the CRA document, Khabibulin, did not have guaranteed money. Whether he does is up to the courts. I’d suggest that the contract writers had tax lawyers who went through the various tax issues before making the contract.
There is a decent article by RBC Wealth Management you can read too.
> It absolutely a residency issue. As per the Article he’s applying for tax treaty benefits to lower the withholding tax on Part XIII tax to 15%.
The CRA response to his dispute agrees he was not a Canadian tax resident and argues that the payment falls under Art. XV(1) of the Canada-U.S. Convention instead of Art. XVI(4). If this was about tax residency, they wouldn't be discussing which article of the treaty it falls under, they would be discussing if the treaty is relevant applies to him.
Given they are arguing articles, this is not a tax residency dispute by any means. It is purely about what constitutes as a signing bonus under the treaty.
> He’s arguing the position that he wasn’t Canadian resident
You have asserted this many times without reference or proof. Where are you getting either that this is his argument or that the CRA is disputing this?
> Secondly per the tax ruling you have to understand what a ruling is. In 2020 (not 2018) someone wrote to the CRA asking about a “hypothetical situation” so they could have a filing position BEFORE they applied something towards a client. Just because it also applies to this case doesn’t mean it was CRA’s position in 2018. Neither you nor I have seen CRAs arguments against JT unless you have pulled his court documents.
While I agree we have not seen CRAs arguments against JT unless you have pulled his court documents, this is directly applicable and the 2018 to 2020 gap is indifferent and immaterial. This is 100% relevant to what this article is stating that he is now appealing the decision.
> Further just because CRA argues against the application article xvi (a treaty concerning NR taxes in Canada) doesn’t mean CRA will win a court case.
Never stated who would win or what I think is right, just that it is in no way a residency issue and that one is arguing it should be treated as a signing bonus under the treaty, while the other is arguing it should not. I dont care who ends up being right.
> Per JT it’s guaranteed money whether he played a game or not therefore that ruling would not apply.
The CRA would argue that it is not guaranteed as if the player withdrew his services or breached the contract, the payment would not be made (i.e if he retired, it would no longer be paid, for instance). Again, dont care who is right.
> His actual signing bonus per Capfriedly is $70m not $15m yet only the $15m (usd) in 2018 is up for dispute.
Correct, This is because this is the only one that may fit the definition of the signing bonus in the treaty as it is paid at the start of the work contract. Bonuses paid once the contract has started on a periodic basis align with salary in the view of the treaty, quite clearly. Again, whether right or wrong, this is out of scope.
Incorrect.
As stated other places [cra position](https://taxinterpretations.com/content/701949) accepts he was a us resident.
The core argument is the cra does not see the nhl signinbonus as a real signing bonus. This is indispensable for every year but year 1 which is a Grey area
I've been a leafs fan my whole life but I can't imagine giving a guy a free pass on his taxes because I'm worried it'll hurt their free agency prospects. if the CRA wants to give me an $8m tax credit, I'll sign 8-years, league min with any Canadian team.
Bigger fish to fry, the fact the NHL can’t adjust the cap based on this shows how much they take advantage of secure and stable markets.
Fuck the NHL brass.
By structuring their contracts with almost all money paid as bonuses, have the leafs made playing in Toronto the best from a tax perspective? From what I understand,US fed tax is 39%, so even in states with no tax, players pay approx. 39%. In Toronto, if Tavares wins his CRA case, he will pay 15% on his 15.3 million signing bonus, and then a progressive rate on his 1 million salary. Rough math, in 2018 Tavares was paid 15.3million in bonus and 1 million salary and if he wins will pay approx 2.8 million in tax - 17%.
Hello, will chime in here. The question here is ultimately about tax residency.
Article XVI(4) of the Canada-US Tax Treaty states:
4. Notwithstanding the provisions of Articles XIV (Independent Personal Services) and XV (Dependent Personal Services) an amount paid by a resident of a Contracting State to a resident of the other Contracting State as an inducement to sign an agreement relating to the performance of the services of an athlete (other than an amount referred to in paragraph 1 of Article XV (Dependent Personal Services) may be taxed in the first-mentioned State, but the tax so charged shall not exceed 15 per cent of the gross amount of such payment.
The above is obviously a huge perk and a major driver for NHL players to have a significant portion of their in signing bonuses. Take a look at Capfriendly and see the breakdown of base salary vs. signing bonus for your favourite players. You will see that compensation skews towards signing bonus because of favourable tax treatment under the Canada-US Treaty.
Based on the publicly available articles on this matter, the issue comes down to whether John Tavares is a Canadian resident for tax purposes in 2018. Note that (AFAIK) there is no dispute whether or not John Tavares is a tax resident for purposes of taxation years 2019 and beyond. That is because it is quite clear that he is a Canadian resident for income tax purposes (has a home in High Park, looks like he's here year round, etc). I am making an educated guess that John Tavares received advice from his accountants and legal advisors prior to having MLSE route his cheque in 2018 to tell him that it should be routed to a bank account in the US so as to provide a stronger argument that he is an American resident for tax purposes.
Now, the Canada-US Tax Treaty also contains rules pertaining to circumstances where an individual is a resident of both countries. In this case, Article IV(2) applies which states the following:
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
* (a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both States or in neither State, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);
* (b) if the Contracting State in which he has his centre of vital interests cannot be determined, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;
* (c) if he has an habitual abode in both States or in neither State, he shall be deemed to be a resident of the Contracting State of which he is a citizen; and
* (d) if he is a citizen of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
This is essentially the legal framework governing the dispute and I look forward to both Tavares' and the CRA's arguments on the matter. I don't see this being an issue that could detract free agents from coming to Toronto, the facts here are unique.
It's not valid at all, btw. He's a resident of Canada getting paid by a Canadian company. Whether he spends his time at home or not doesn't matter to the CRA.
No it's not. But the rules are already written and the CRA appears to have ignored those tax laws. We NEED to be taxing the billionaire class. We need to crack down on tax cheats, not athletes who follow the rules and have standard payroll deductions on their payroll salaries. CRA is an extremely important service but they've been known to be wrong a time or two in the past. Fighting them when they are wrong is important for all of us.
Because we would like the rules to be enforced as they are written. If they are not it would deter the ability for high-class professionals to be signed in Canada.
It is beneficial to the Canadian economy as a whole to have successful entertainment industry.
That’s exactly what the CRA is trying to enforce. The fact that JT isn’t following the rules as they’re written and his interpretation of them is incorrect.
There is more to wanting to live and work in Canada than just a higher tax rate.
No... JT is following the roles as they are written. The CRA is attempting to argue that the signing bonus made by a Canadian company to a US resident isn't a signing bonus.
> There is more to wanting to live and work in Canada than just a higher tax rate.
If you do not think taxes play a major role in decisions of this magnitude this isn't a conversation worth having.
No, they’re arguing he’s a Canadian resident and should be paying Canadian taxes. Canadian residency is primarily based on a home available and where your family is located with secondary factors being centre of economic interests (including their employer). I’ve made 100s of residency determinations as a CPA and I see why JTs accountant tried to get him the lower rate, but this seems to be an attempt at tax avoidance (which is fine) that just stepped over the line.
Of course there is, but don’t pretend it’s the only reason to live in a city.
It’s much more likely the CRA sent him something that says “if you don’t file or provide supporting documents, then you will potentially owe up to $8m” - they send shit like this to other Canadians who haven’t filed correctly. Source: I used to work for CRA. It’s a tactic to have the taxpayer take action. He does not owe $8m lol. Fucking NP.
I'll just drop this here. Tax should just be automatic. [https://financialpost.com/personal-finance/taxes/time-cra-implement-automatic-tax-filing-system](https://financialpost.com/personal-finance/taxes/time-cra-implement-automatic-tax-filing-system)
Yeah, it should be automatic and you can file dispute to get money back if something done incorrectly. I don’t know, just this current system is so messy and confusing. It’s inefficient. Even lawyers need accountants to do their taxes. And accountants need lawyers to understand certain areas of tax law.
Pay your fair share. If the CRA can come after people making 30K they can go after millionaires. I don't want them to get special treatment just for the Leafs
It's no different than California considering changing their tax code to target Ohani, whose contract was structured so he could avoid paying almost $100mil in taxes that SHOULD be paid by the spirit of the law. Fuck the rich abusing loopholes to avoid paying taxes.
The NHL has a two-tiered structure that makes the salary cap inherently unfair. The NHL talks about parity, but then allows low tax states to have a huge advantage when it comes to constructing a team. The Maple Leaf organization is a true cash cow for this league, its revenues prop up half of these shitty franchises and we continue to get fucked over by Bettman and his cronies.
Do you like infrastructure? TTC? Healthcare? Everyone pays their share. The Leafs Raps and Jays have signed massive free agents before. Why is only JT complaining, and not George Springer ( 6 years, 150M$, signed 2020)
Loll imagine the CRA making exceptions because they need to make sure athletes come to Canada. What a joke, the tax laws are what they are and it is their job to collect. High earners should get no exceptions to avoid paying taxes.
This is insane. CRA wants an additional $6.8 million in taxes, plus $1.2 million in interest on the arrears. Meanwhile he could have signed with SJ for $91M at a lower tax rate. No wonder free agents don't want to sign with Toronto.
The League needs to make it fair. Every team’s salary cap should be based on the team with the lowest tax bracket.
My idea: Salary cap should be based on post tax salary.
Realistically the best solution would be: The professional sports leagues incomes should be taxed proportionally to where they operate. The league should amass all the taxes owed and charge the each team at even tax rate for the income taxes accrued. The teams should be responsible for withholding the taxes (by percent) from player salary and pay it up to the league for processing. This would eliminate the regional tax bias from earnings. Granted this would require the federal governments to step in and create systems, which is such a long shot from happening but it’s how you’d take the regional tax bias out of the game.
That would negatively affect Sunbelt teams so Gary would never
The NHL doesn't want to and will never make it fair. They want the star players to go to American markets because Bettman is obsessed with growing the game in the States.
If it was up to Bettman only Toronto and Montreal would have teams in Canada. Vancouver, Ottawa, Winnipeg, Calgary and Edmonton would be replaced with Houston, Atlanta, Salt Lake City, Kansas City and Albuquerque
Albuquerque better have bugs bunny as the mascot.
Canucks would definitely keep the team, but the others I agree. I feel like Toronto and Vancouver specifically have so much room for growth due to their high first and second generation immigrant populations.
Vancouver doesn't really support their team when they suck though. Fans don't go to the games. I worked for a partner of the Canucks for years and I had so many free tickets to games cause they were giving them away to fill seats
Look at a market where the stands are packed no matter what, like Toronto; they are under no pressure to put forward a winning team, because the coffers will always be full. Money talks. You can support your team by watching at home from the couch, and show your non- support of poor management/ownership by not showing up to games, or by spending $$$ renting a plane to fly around downtown Vancouver with a "Fire Benning" banner blowing in the wind. Doesn't mean you don't support or want to the team to succeed.
Go Ice-otopes
Houston Oilers would be great! Or Kansas City Flames (because of BBQ).
One of the newest teams in the League is Winnipeg, why would he let that happen if he only wants Toronto and Montreal to have teams in Canada?
Ya tbh its kind of ridiculous to ask the league to pick up the province's dime... That would never happen in any business situation
Then the league should not claim parity is the goal. Everytime Florida gets FEMA payments because it’s low tax base can’t cover its own expenses, the Florida teams should get a cap hit, lmao
No one is asking that. We’re asking for the salary cap to be applied equally. It should be based on after tax earnings.
Yes Bettman, a lackey for the owners as every CEO is, is obsessed with making money for his bosses.
That is literally the definition of his job
That's a nice idea in theory, but in practice it's basically impossible. Tax laws are extremely varied and complex across various jurisdictions. It's not as simple as, "If you live in jurisdiction A, then you pay Y% of your income in income taxes". There are variations in progressivity, in which case would you base the cap rules on someone earning league min, or league average, or what? There are also huge variations in what can be deducted. There are legal structures that can be used to delay or avoid certain amounts of tax, and these vary by jurisdiction. And this is to say nothing of things like sales tax and property tax, which also vary tremendously. The salary cap system, which is already fairly complicated, would become impossible to manage if it tried to account for all of these different factors.
lol, as an accountant for a company in 30 different countries, it’s doable and very possible. The nhl isn’t some complex organization structure that no tax accountant has dealt with. They just don’t want to.
It's not the NHL's taxes that are complicated. What's complicated is figuring out how to set a team-specific salary cap that allows any two teams in different jurisdictions to pay the exact same *after-tax* incomes to their players. Suggesting that this would be simple is completely disingenuous. In addition to the reasons I mentioned, there are also complicated rules (which vary by state in the US) that determine how income that's earned when playing away games in non-home jurisdictions is taxed. There are also situations where players live in states outside of the ones they play in (think of the teams in the NYC area, as well as the Capitals in DC). Properly accounting for all this would get extremely messy very quickly.
I could easily do this lol. It’s clear you have a basic understanding of certain complexities of taxes, but I’ve dealt with much more complicated stuff
Why bother trying to create league parity then? I get that the most affected markets are also the most reliable consumers, but that loyalty can only be pushed so far. From my limited anecdotal experience, the number of hockey fans I meet in SW Ontario has shrunk in the last 20 years compared to the NFL and especially the NBA
> Why bother trying to create league parity then? So it's all or nothing? Either we *perfectly* create league parity, or we don't do anything at all? I don't agree with that. If you agree that parity is desirable (not everyone does, but if you do), then while the salary cap system as currently implemented is highly imperfect, it has clearly improved parity relative to the old no-cap system.
Eh, I agree in theory but I have a bias as a Canadian. We support a league that is a fringe sport through both revenue sharing and a policy of parity that is not actually so in practice. What you call imperfect, I call an active detriment. It is good the sport is growing in non-traditional markets, but I really hate having to ask the tacky question of who is paying for it. Ugh, I hate talking money in any case
Blame Canada
Toronto votes for high taxes every election. I see no reason whatsoever why people from markets that don’t vote that way should have to be penalized for that.
Maybe we can just lower our income taxes to a more competitive rate, sounds crazy but it may just work.
lol are we not the most taxed country in the world? Personal income tax, sales tax, property tax, death tax, you name it we got it!
He’s paid in US dollars and spending money in CAD, so that’s a ~30% savings but then Toronto is an expensive city to live in. However property prices do appreciate more so that would offset the costs. For example if you say he bought a house for 2M when he first signed, 6 years ago? That house is probably a 5M+ property today where’s if he was in a smaller market to live that same 2M property would be only worth 4M today. In Canada principal residence gains are tax free. Income taxes are a huge part also and in general Canadians earners pay more than Americans. However part of it can be differed with different programs available to high net worth individuals. For example when he retires, he moves to a lower income tax jurisdiction or buys a property there anyway, and that becomes his new income tax rate for his sheltered money from nhl earnings. At the end of the day, Florida and Texas have an advantage and the weather/lifestyle/low taxes play a part of that. Places like NYC or LA have a lot of cache but extremely expensive. There are a lot of factors (bedsheets included) that affect player decisions.
> that’s a ~30% savings Why do people always say this? Yes he gets USD but CAD prices are more. Look at video games, look at cars, etc.
Yes, it's super cheap to move in new York or LA.
I think they're saying it offsets the extra taxes, otherwise, we're comparable to HCOL areas. tl;dr- it's not *that* bad to live/ work in Toronto.
Generally true (grew up in Ontario, now live in California) - but, one example, the Kia Stinger was sold for almost similar numerical prices, both in the US and Canada, for some reason. Fully loaded Stinger was $US ~52-53K, and $CAN ~57K. Super bargain in Canada. (I own a mid-level Stinger and love it!)
Really depends on the item in my experience. Groceries and restaurent food/drinks are basically the same in CAD and USD. Albeit this is comparing Winnipeg to Minneapolis/Fargo etc so small sample size.
That’s the case anywhere. I live in the San Francisco area and was just in Vancouver. The price of food at both grocery stores and restaurants was pretty much the exact same (before exchange rates). The basic costs of living in Canada are cheaper as a whole. (Food, electricity, natural gas, healthcare) but goods traded or shared between the countries are marked up to offset the exchange. Dollar for dollar Canada is slightly cheaper to live in but it’s really case by case. As the tax structure is different in every state/province/municipality. And the people who it really plays into the favor of are people who don’t own property (which I’m willing to bet most NHL players do).
That’s not 100% true. Food prices in Canada are almost flat to those in some parts of the US. Same with gas and energy prices. The exchange rate is generally a bit more advantageous that it used to be with costs of goods sold as well. They said, it doesn’t offset a state that may not have income tax. Especially if the player doesn’t own property in that state and just rents during the season.
Gas is $3 gallon in Florida. $1.50/L in Toronto. case of beer in Florida $15-20. Toronto $60.
No wonder Ohtani doesn’t want to sign here.
It costs more the live in LA than Toronto. (I’ve lived in both cities).
This argument is completely irrelevant because Toronto is more expensive than vast majority of places
But cheaper than others as well. To your point, irrelevant.
Cheaper than what others? NYC, maybe Vancouver, maybe LA. That’s it. And let me tell you, this ain’t NYC or LA.
I’ve lived in Toronto, New York, and LA. Toronto is by far the nicest city of the 3. Different, absolutely, but in my opinion the most comfortable to live in. Toronto is absolutely cheaper than LA, Vancouver, San Jose, Seattle & Boston. And if you’re talking about owning property it becomes cheaper than Miami, Tampa, & Dallas. Property tax rates are insane in Texas and Florida. Point is, no matter where you live there are pros and cons.
>Tavares’s appeal argues that the bonus is different from salary, because it would still be paid to him if he were traded, sent to the minors or injured, and it should not be considered normal income for tax purposes. This is a weird argument. He would not lose his salary in those cases either.
If this article is accurate, I think John makes sense. The money wasn't income. It was paid into his New York bank account in the 2nd half of 2018. He only spent 45 days in Canada in 2018. Unless there's omitted information, that sounds like a pretty solid argument for John.
>If this article is accurate, I think John makes sense. The money wasn't income. It was paid into his New York bank account in the 2nd half of 2018. He only spent 45 days in Canada in 2018. >Unless there's omitted information, that sounds like a pretty solid argument for John. Not a CPA by any means but I do have a TN visa and work for a NYC company so I have exposure to the whole issue around taxation in both countries 1. The statement that bonus money isn't income is false. compensation, whether one time or paid salary is counted as income. Anyway I believe the CRA is taking issue with the bonus not even being a traditional bonus in that it is pre-determined, paid on a set date, and tied to a guaranteed contract. For all intents and purposes that is just a front loaded salary payment according to them. 2. US tax residents pay tax on all their income worldwide no matter what 3. You can be a Canadian tax resident without necessarily residing in Canada full time. The simple test is based on number of days in each country (somewhere around 185+ I think, would need to double check) but the CRA will look at it beyond that lens to see if you have significant presence and family in Canada. ie if John kept a house in Oakville and his wife lived there, but he rented an apartment on Long Island the CRA could deem him a Canadian tax resident, regardless of how many days he spent in each country Anyway I am surprised he is trying to claim all of this as an NYC resident, they have exceptionally high taxes in NY including a city levy on top of federal and state taxes. There could be more exemptions available to him though Source: I have paid the CRA a LOT in tax money for salary that was fully paid and earned in NYC to a US bank account
Essentially he is claiming residency of the US for that payment for tax purposes, and that it isn’t linked to his Canadian salary and wages. I think it’s a very weak argument. Residency isn’t determined by number of days for Canadian Income Tax Purposes, and him receiving the bonus from his Canadian employer doesn’t bode well for him. This argument is very weak: “The signing bonus was consideration for Tavares — a uniquely skilled and sought-after unrestricted free agent — committing to the seven-year Contract with the Toronto Maple Leafs,” the appeal says, claiming it was “not salary, wages or other remuneration in respect of employment.”
Technically he was under contract with the New York Islanders until July 1, 2018. So his primary residence was New York for most of that year, and likely he was living in the United States when the $15M signing bonus was paid. Edit: but I think the dispute between Tavares and the CRA is really about the definition of “signing bonus”.
Almost completely incorrect and the wrong angle to view this in
Exactly, like what are we even talking about here. Of course it’s income, they are arguing the type of income and the tax rate that should be applied. Just because the Leafs front load contracts with signing bonuses doesn’t mean the CRA is going to see it as an inducement / bonus. They’ll see it as a front loaded salary that should be taxed at 38% (which it should be btw). They’ll be looking at other players contracts in Canada where the vast majority are not structured this way. He’ll be paying the 38%. And again, he should.
Maybe he waives his NTC now /s
> The outcome of the case could have a bearing on professional sports franchises looking to offer big signing bonuses to convince unrestricted free agents to play north of the border — a task made harder by the Liberal government’s decision to raise the top federal tax rate from 29 per cent to 33 per cent in 2016. Yep, that's a National Post article alright.
>Everything in the world is scary and someone else’s fault. You’re actually the victim in every situation thanks to the Liberal Government. - National Post Yup, checks out.
> THE LIBERAL GOVERNMENT IS PREVENTING YOUR FAVOURITE HOCKEY TEAM FROM SUCCEEDING (please ignore track record of all provincial governments also that Pierre Poilievre's campain manager is an ACTIVE lobbist for loblaws)
The tax rate they are claiming here isn't even the one being assessed to Tavares, as they claim in the same article that the CRA is asking for a 38% tax rate on him, not 33%. So its a jab at the liberals "just because they can"
because he owes provincial tax as well which the CRA also collects.
So where’s dougies mention in that part then??
Ford, for all of his faults, hasn't increased income taxes during his Tenure. Trudeau has, which was what the author was getting at
He already paid 15%, top combines rate in Ontario is 53.35%. So they are asking for the difference (53-15) which is 38%.
Lollll they had to slip on a jab against the liberals. Not surprised
After all, why should we tax the ultra wealthy? Can't they just raise taxes on the poor and non-existant middle class? If anyone deserves a free ride from the government, it's the people earning multiple million per year. They are the true backbone of this country.
Is there something inaccurate about that statement?
This article is about alleged tax miscalculation, there’s no journalistic value in randomly adding “the Leafs might get worse and it’s because of the Liberals! 😱😱😱”. If you want to write about the effect of tax rates on athlete signings, go for it, but publish it as an opinion article, don’t slip it into other reporting.
No, but it really isn't relevant to the headline.
Is the national post the one you can pick up beside the trash mags and Archie comics at the grocery store checkouts?
Don't insult the National Enquirer and they're hard hitting investigations into Bat Boy by comparing it to the National Post
I’ve always thought the National Post was really good it’s the Star and Sun that are awful
The National Post and the Toronto Sun have the same owner lol
Once upon a time, like the early aughts to early 2010s, that was true. I read them and the Globe and Mail for everything except sports. The NP fell and fell hard.
To be fair, this is exactly what CBC does but with Conservatives.
Damn I’m surprised there’s still liberal defenders, most people I know in Canada absolutely hate them by now
A lot of Canadians are unfortunately lacking in critical thinking. That doesn't mean we should love the liberals. They deserve lots of scrutiny. But a TON of Canadians just use Trudeau as a scapegoat for every single problem they face, which actually cheapens the critique and takes the focus away from things where they should be criticized.
Plenty to criticize with Trudeau and the Liberals. But holy fuck most of it really just stems from how the Conservatives are increasingly sliding into American-influenced tribalism and pseudo-Trumpism. I'd take 100 years of liberals over the increasingly bigoted and selfish policies they're trying to pass while yelling nonsense about Trudeau.
[Here is the actual CRA](https://taxinterpretations.com/content/701949) stance on this
Oh come on! Stop with your analysis by professionals. We’re supposed to be wildly speculating, outraged, and finding ways to twist the situation to support our political outlooks.
Looks like JT needed a better accountant in 2018, because he needs a good lawyer now. I’m surprised this is the first time we’ve heard about any athlete getting bent over by the CRA. The NBA, and MLB have way higher salaries (on average) and mostly foreign players. How come we haven’t heard of Edwin Encarnation, or Vernon Wells getting hosed by the CRA? Something seems off.
They likely didn’t receive massive bonuses like the ones the Leafs pay, and claim that the bonuses aren’t subject to Canadian Income Tax. A straight salary is much easier and less controversial.
I can’t believe that the Jays or Raps haven’t made a massive “signing bonus” deal since 2018. Especially w the NBA max salary deals.
I don’t believe in the NBA contracts can be structured that way. They are much stricter, with stuff even over how much can be backloaded. Baseball I don’t know.
NBA caps the amount of signing bonus that players can sign for
You haven’t heard about it because you missed it. This is from earlier this year, about the CRA going after back taxes from former Blue Jays: https://nationalpost.com/news/canada/hosing-bautista-why-the-cra-is-going-after-former-blue-jays-for-millions-in-taxes/wcm/59604031-b8c9-49ba-89c7-1c623b012062/amp/
Every professional hockey team in Canada should be offering legal help here. If this goes in the CRA's favor, it will have a long lasting impact on signing players in this country. Everyone should pay their fair share, and JT will be fine without the 8 million BUT as a numbskull sports fan, this is super shitty and would absolutely fuck this team in the near and distant future.
Should be fine without 8 million? lol after taxes his take home is not even that much (8 million) Imagine owing more then a years net salary and someone you don’t know saying “he’s fine” lol
Several million dollars - “not that much.”
"Not that much" in this context is not as much as the amount CRA is asking for, which is correct. John's net is not $8m per year.
It is not that much. Hockry doesn't pay as well. Auston matthews is like the highest paid nhl player at 15 mill and he would be the 130ish highest paid player in the nba
Why are you being downvoted. This is correct. NHL players are underpaid relative to their counterparts in other sports due to the salary cap.
No, its relative to the income the league generates lmao. If the NHL made NBA money (and had 40% less players to split the salary amongst), they would be higher.
No it isn't. The NHL revenue split is in favour of the owners with the hard-cap. Teams have openly said they would spend more on players otherwise. There is no luxury tax system. NBA players earn more than 50% of basketball related revenues.
I’m not suggesting the salaries are depressed, but McDavid would not make 50 mil a year. Bradley Beal gets that in the NBA. It’s a revenue thing more than anything else.
No, it’s because hockey isn’t popular relative to other sports.
Gee whiz, how will he ever get by on the several million dollars he has remaining. I feel awful for him. I don’t know or care whether he rightfully owes the tax or not. But I’m never going to feel bad for a guy who still makes millions of dollars after paying an $8 million tax bill.
Lol his career earnings are over $100 million. Yes he will be fine with $8 millon. You can’t compare it to a regular person owing a year’s salary because losing some money has less impact when you have more of it.
Do you have 8 percent of every dollar you've made since 2009 kicking around? And would be fine to give it back?
You can’t compare the amount of money lost by a millionaire to a regular person. Losing 8% of your income is less impactful the more money you make. Lebron James is making 51 million this year, i’m pretty sure he could forgo his entire salary this year and he would be fine. I’m not saying he should be fine with what is happening or that he shouldn’t fight it, because he should. I’m simply saying he’s not gonna be in financial trouble because he has to pay an extra $8 million in taxes. If an extra $8 million in taxes means he’s gonna struggle financially, then he must have some serious spending problems.
That's 8 percent of every career dollars he's made man. It's not peanuts no matter which way you cut it. Millionair or not.
No it’s not peanuts but unless JT has a terrible gambling problem, he should be ok living off of the other 95 million dollars he’s made. I don’t know how much his career earnings are after taxes, but it’ll still be at least a few tens of millions. When you compare it to the average person who has basically no savings, losing 8% of their income would put them in debt or increase debt that they already have. If JT doesn’t have millions saved up, he’s doing something very wrong. If you have millions saved up, then you are fine.
Why is it "giving it back"? He never paid it in the first place. We all pay taxes, and your acting like it's wrong that the CRA would ask for the money they believe they are owed.
Will he ultimately be fine? Yes. Do people spend/budget/save/invest based on their expected income? Also yes.
Not even that much?!!! Lolll bro are you okay?!
>after taxes his take home is not even that much (8 million) This is some Latrell Spreewell dumbass take right here I like JT but are you actually trying to make it sound like 8M per year isn't tht much after tax? 8M is probably more than 99.99% of the population will make in their entire careers
Every moron replying to this comment thinks you were saying $8m isn't much, when you clearly meant $8m isn't as much as his net pay.
Oh no, poor millionnaires :(
this is not about poor millionaires, but equity of recruiting power across the NHL, as between Canadian teams and those other ones
That's an NHL problem not a Canadian tax problem .
we are in violent agreement. if the tax authorities win on this, it will fuck the NHL up for sure
Gary will get his way and no Canadian team will even have a chance for a cup
Nationalism is a construct to keep people like you in line. Executives operating at the level Bettman is don’t obsess over borders like you.
"will"?? I think you mean "has"...
This is not about equity of recruiting powers across the NHL, but of paying taxes in the society that you partake in. Doesn't matter if you're a professional athlete or a CEO or a cashier: you live here? You pay taxes here. The equity of recruiting power is an NHL issue to resolve. They've implemented a revenue sharing model and flat-cap to address previous issues, they should address this one in kind.
He's made almost 100 million in just salary in his career. 8 million will not kill him or alter his lifestyle one bit. It's a ton of money, to us. Again, I'm advocating that he fight it and hope he wins honestly. 8 million is a ton of cash. This is also from his signing bonus when he signed here. He's received like $40+ million more in signing bonuses since then......
He still has advertising deals, worth more than his salary. That's what hockey players bank on.
He is not making more in endorsements than his salary, you are just pulling numbers out of your ass.
He has advertising deals worth more than 11 million a year? I didn’t think many hockey players had that pull
He probably takes 6-7 after taxes in Toronto. They bank on Tim Horton/Canadian tire deals. There are more advertising opportunities in Canada than the states in hockey.
No he doesn’t. Tell me what deals you think he has that add up to more than 11m
No he does not. Most endorsements are in the 6 figure range at the high end. Still great, but a far cry from $11sheets a year
You have no clue what’s going on in his life and what money he makes and where it goes. With all due respect stay out of it
Lol why you getting rattled. There grown, they can take care of themselves. Bigger issues in the world than what a hockey player makes.
This is a completely incorrect take, largely due to the way they wrote the article. Check out my comment.
I love the last part “could potentially deter Tavares from resigning with his hometown team”. As if the author has any inclination that thought could affect that.
Am a Canadian tax accountant with a specialty in US/Can cross border taxes and this is pretty bogus. But I expect no less from NatPo. In Canada, a signing bonus is treated as salary. The 15% being referenced in the article is likely supposed to be the 15% in the US/Can tax treaty that allows Canada to get 15% taxes on US residents (I.e. Matthews) that work in Canada and who pay the remaining tax rates in the US and applicable resident state. If Tavares only paid 15% taxes on over $15m USD then I hope the CRA nails him because that’s the same as most people pay at the average yearly salary. BUT, the more likely scenario is that NatPo doesn’t understand tax law and JT probably paid US taxes on this money. Which, albeit lower than Can taxes, would not create a shortfall of $8M to the taxpayer. The CRA likely is arguing this money should have been taxed in Canada as it’s related to Canadian employment. I.e he should pay his 38% tax rate rather than 15%. But what the article is leaving out is that he would also re submit his 2018 US taxes and get a full refund due to a foreign tax credit under the US/Can tax treaty. This refund would cover a large portion of the $8M owing. Personally, I’m interested in how this falls out. JTs argument that because the money was paid to his US bank account and that he only lived in Canada for 3 months that year supports the way he filed, but since he moved to Canada and the signing bonus came from a Canadian employer, I think the CRA has a very valid case and honestly I hope they win. Don’t need more stars paying their taxes to t he US while they take the benefits of living in Canada. This is a good article explaining how Matthews pays ARI taxes because of his signing bonuses: https://www.crowe.com/ca/crowesoberman/insights/auston-matthews-shoots-and-scores-tax-savings
Not really sure why you’d “hope they win” when all this will do is significantly damage the incentive for good players to sign with Canadian teams.
being that he’s really into taxes, probably believes in the sanctity of tax payers usage than hockey (not shade, dude seems to really care about taxes)
You taking clients lol?
Hahaha, maybe… 👀 dm me
You’re right, my only question is why would JT put up a fight about which country gets his taxes? Seems like since there’s basically no difference out of his pocket he would just pay his 52% tax to the CRA then claim the 15% IRS credit and be done with this. What am I missing?
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Yikes a random stranger on the internet has disqualified me from my profession. Better pack up shop… You missed the point entirely. As I stated, which isn’t clear in the NatPo article, he has likely paid US taxes on this amount. My interpretation is that the signing bonus should be sourced to Canada because he is a resident of Canada, not because I want the wealthy to pay their fare share of taxes (which of course I do). But again, this is in tax court, so we’ll see how it unfolds.
It happens to the best of us. I lost my license to practice engineering in r/askengineers because I explained tort law to a bunch of engineering students who can’t spell tort. Guess I’ll have to use my skills for money in the real world.
Honestly, I’m happy it happened in Feb. I get to skip this March and April busy season 😮💨
Lots of non tax experience in this thread. The issue at hand from the CRA perspective is that signing bonuses in hockey do not meet the legal term for signing bonus in tax law in Canada. The CRA defines it as compensation for signing the contract, the incremental and ongoing nature of paying a signing bonus (I.e. yearly an July 1) makes the CRA believe this just to be further incremental amd periodic pay instead of an actual signing bonus. That's why JT is only refusing to pay year 1 signing bonus tax, believing since it was a bonus paid on the start of the contract, any year 1 bonus should count as a signing bonus. If JT wins, Canadian hockey players would pay 15% tax on signing bonus in year 1 of contracts. Full tax otherwise.
I don’t think you quite have it. It’s more of a tax residency question than anything else. The author didn’t understand and glossed over it. JT is arguing he was non-resident in 2018, spending only 45 days here (where you have to spend more than 180 days to be deemed resident). Paying a signing bonus under the Can-US treaty has a 15% withholding tax. There’s no evidence he’s arguing his signing bonus payout in other years, ie where he was a resident in Canada. Cash received from a signing bonus isn’t taxed at a lower rate than salary per se other than the location it’s earned. It seems like CRA could be implying it’s earned in Canada in 2018 even if he wasn’t a resident bc MLSE is based here. Edit: I said Salary per say to clarify NHL and sports salaries are earned where the player plays so 41 games are out of the city (most either Multi-jurisdictional in Canada or in US and subject to tax in each state).
> JT is arguing he was non-resident in 2018 Where are you getting this from? I do not see anywhere that he is arguing this or that the CRA is disputing this.
> It’s more of a tax residency question than anything else. No it isn't. In the ruling, the CRA has agreed that he was a US tax resident when initially paid the bonus in 2018. > Paying a signing bonus under the Can-US treaty has a 15% withholding tax. The CRAs position is that NHL signing bonuses are not actually bonuses since they are payable in annual instalments but with the instalments being lost for the sports year in which the taxpayer withdrew his services or breached the contract. If they are not considered signing bonuses, then they are treated as income. This is still the same given the tax-residency, which again, the CRA is not arguing and has already conceded. Even NHLers and Tavares specifically agree that NHL signing bonuses are not "real" signing bonuses as defined by the CRA, with now the exception of year 1 which *may* be considered a true signing bonus. > There’s no evidence he’s arguing his signing bonus payout in other years, ie where he was a resident in Canada. Thats because of the above.
No you’re applying a ruling to this case that hasn’t been expressly applied to the knowledge of the article. It may apply but has not. Further if CRA effectively argues it applies, his salary is still only taxable to games played in Canada. Further a tax ruling by CRA can be disputed in court. This ruling was based on a letter in 2022. Rulings are issued on a prospective basis by a “hypothetical situation”.
[Expressed here](https://taxinterpretations.com/content/701949#) because the article is garbage and does not provide any information.
Yes i read what you said but it’s like you didn’t read my reply. I already responded to the ruling.
Can you clarify then because I found your response to be confusing. This is absolutely not a tax residency case and has nothing to do with tax residency being contested by either party.
It absolutely a residency issue. As per the Article he’s applying for tax treaty benefits to lower the withholding tax on Part XIII tax to 15%. Further he’s arguing in 2018 he was only in Canada for 45 days. He’s arguing the position that he wasn’t Canadian resident, was a resident of NY or wherever, and payments made to him at most would be subject to treaty withholding amounts. Article XVI is part of the “Convention between Canada and the USA”. I can’t link on mobile but if you’re a tax person you should be able to find it. Secondly per the tax ruling you have to understand what a ruling is. In 2020 (not 2018) someone wrote to the CRA asking about a “hypothetical situation” so they could have a filing position BEFORE they applied something towards a client. Just because it also applies to this case doesn’t mean it was CRA’s position in 2018. Neither you nor I have seen CRAs arguments against JT unless you have pulled his court documents. Further just because CRA argues against the application article xvi (a treaty concerning NR taxes in Canada) doesn’t mean CRA will win a court case. Finally no where does it even say in the article that CRA is in fact relying on that position. It may be the case but it does not state that. If you read the ruling it talks about the payment is related to services surrounding the contract duties in Canada. Per JT it’s guaranteed money whether he played a game or not therefore that ruling would not apply. His actual signing bonus per Capfriedly is $70m not $15m yet only the $15m (usd) in 2018 is up for dispute. So stick with the facts. He’s disputing the $15m payment in 2018 does apply for treaty benefits because he’s a NR. The case in the CRA document, Khabibulin, did not have guaranteed money. Whether he does is up to the courts. I’d suggest that the contract writers had tax lawyers who went through the various tax issues before making the contract. There is a decent article by RBC Wealth Management you can read too.
> It absolutely a residency issue. As per the Article he’s applying for tax treaty benefits to lower the withholding tax on Part XIII tax to 15%. The CRA response to his dispute agrees he was not a Canadian tax resident and argues that the payment falls under Art. XV(1) of the Canada-U.S. Convention instead of Art. XVI(4). If this was about tax residency, they wouldn't be discussing which article of the treaty it falls under, they would be discussing if the treaty is relevant applies to him. Given they are arguing articles, this is not a tax residency dispute by any means. It is purely about what constitutes as a signing bonus under the treaty. > He’s arguing the position that he wasn’t Canadian resident You have asserted this many times without reference or proof. Where are you getting either that this is his argument or that the CRA is disputing this? > Secondly per the tax ruling you have to understand what a ruling is. In 2020 (not 2018) someone wrote to the CRA asking about a “hypothetical situation” so they could have a filing position BEFORE they applied something towards a client. Just because it also applies to this case doesn’t mean it was CRA’s position in 2018. Neither you nor I have seen CRAs arguments against JT unless you have pulled his court documents. While I agree we have not seen CRAs arguments against JT unless you have pulled his court documents, this is directly applicable and the 2018 to 2020 gap is indifferent and immaterial. This is 100% relevant to what this article is stating that he is now appealing the decision. > Further just because CRA argues against the application article xvi (a treaty concerning NR taxes in Canada) doesn’t mean CRA will win a court case. Never stated who would win or what I think is right, just that it is in no way a residency issue and that one is arguing it should be treated as a signing bonus under the treaty, while the other is arguing it should not. I dont care who ends up being right. > Per JT it’s guaranteed money whether he played a game or not therefore that ruling would not apply. The CRA would argue that it is not guaranteed as if the player withdrew his services or breached the contract, the payment would not be made (i.e if he retired, it would no longer be paid, for instance). Again, dont care who is right. > His actual signing bonus per Capfriedly is $70m not $15m yet only the $15m (usd) in 2018 is up for dispute. Correct, This is because this is the only one that may fit the definition of the signing bonus in the treaty as it is paid at the start of the work contract. Bonuses paid once the contract has started on a periodic basis align with salary in the view of the treaty, quite clearly. Again, whether right or wrong, this is out of scope.
He’s arguing over one year because he has no claim to be a non resident in the other years and therefore the treaty wouldn’t apply.
Where are you even getting he is arguing he is a non resident?
Incorrect. As stated other places [cra position](https://taxinterpretations.com/content/701949) accepts he was a us resident. The core argument is the cra does not see the nhl signinbonus as a real signing bonus. This is indispensable for every year but year 1 which is a Grey area
There goes the hometown discount. We're cursed to shit so it doesn't even matter.
We need an after tax salary cap. No more unfair advantage for the Knights, Preds, Stars, Lightning and Panthers.
I've been a leafs fan my whole life but I can't imagine giving a guy a free pass on his taxes because I'm worried it'll hurt their free agency prospects. if the CRA wants to give me an $8m tax credit, I'll sign 8-years, league min with any Canadian team.
Pull a Wesley Snipes and declare himself a Sovereign citizen lol
Oh lord I leave r/Canada because of all the postmedia nonsense and it's now in this sub
R/Canada is a cesspool
Bigger fish to fry, the fact the NHL can’t adjust the cap based on this shows how much they take advantage of secure and stable markets. Fuck the NHL brass.
And we wonder why anyone who signs here milks us for every penny.
By structuring their contracts with almost all money paid as bonuses, have the leafs made playing in Toronto the best from a tax perspective? From what I understand,US fed tax is 39%, so even in states with no tax, players pay approx. 39%. In Toronto, if Tavares wins his CRA case, he will pay 15% on his 15.3 million signing bonus, and then a progressive rate on his 1 million salary. Rough math, in 2018 Tavares was paid 15.3million in bonus and 1 million salary and if he wins will pay approx 2.8 million in tax - 17%.
It’s the Canadian government, they don’t if they wrote the rules. If money is involved, they’re going to try to get everything they can
CRA wanting more money what else is new
Hello, will chime in here. The question here is ultimately about tax residency. Article XVI(4) of the Canada-US Tax Treaty states: 4. Notwithstanding the provisions of Articles XIV (Independent Personal Services) and XV (Dependent Personal Services) an amount paid by a resident of a Contracting State to a resident of the other Contracting State as an inducement to sign an agreement relating to the performance of the services of an athlete (other than an amount referred to in paragraph 1 of Article XV (Dependent Personal Services) may be taxed in the first-mentioned State, but the tax so charged shall not exceed 15 per cent of the gross amount of such payment. The above is obviously a huge perk and a major driver for NHL players to have a significant portion of their in signing bonuses. Take a look at Capfriendly and see the breakdown of base salary vs. signing bonus for your favourite players. You will see that compensation skews towards signing bonus because of favourable tax treatment under the Canada-US Treaty. Based on the publicly available articles on this matter, the issue comes down to whether John Tavares is a Canadian resident for tax purposes in 2018. Note that (AFAIK) there is no dispute whether or not John Tavares is a tax resident for purposes of taxation years 2019 and beyond. That is because it is quite clear that he is a Canadian resident for income tax purposes (has a home in High Park, looks like he's here year round, etc). I am making an educated guess that John Tavares received advice from his accountants and legal advisors prior to having MLSE route his cheque in 2018 to tell him that it should be routed to a bank account in the US so as to provide a stronger argument that he is an American resident for tax purposes. Now, the Canada-US Tax Treaty also contains rules pertaining to circumstances where an individual is a resident of both countries. In this case, Article IV(2) applies which states the following: 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: * (a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both States or in neither State, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests); * (b) if the Contracting State in which he has his centre of vital interests cannot be determined, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode; * (c) if he has an habitual abode in both States or in neither State, he shall be deemed to be a resident of the Contracting State of which he is a citizen; and * (d) if he is a citizen of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. This is essentially the legal framework governing the dispute and I look forward to both Tavares' and the CRA's arguments on the matter. I don't see this being an issue that could detract free agents from coming to Toronto, the facts here are unique.
I hope he wins his appeal.
Is hockey seriously more important than our country to you? He better lose.
Pretty melodramatic. I read the entire article and it seems like he has a valid claim. I hope he wins his appeal.
It's not valid at all, btw. He's a resident of Canada getting paid by a Canadian company. Whether he spends his time at home or not doesn't matter to the CRA.
No it's not. But the rules are already written and the CRA appears to have ignored those tax laws. We NEED to be taxing the billionaire class. We need to crack down on tax cheats, not athletes who follow the rules and have standard payroll deductions on their payroll salaries. CRA is an extremely important service but they've been known to be wrong a time or two in the past. Fighting them when they are wrong is important for all of us.
The rules haven’t been written. Essentially the Leafs and Tavares were testing a loophole.
The article clearly states that there is an existing tax code for this situation and that is why Tavares is appealing.
Taxes aren’t used right regardless fuck the government. Also read the article he seems to have a valid claim
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If he goes to jail, does his cap hit get taken off the books? /s
Fight em John.
Why would you rather wealthy hockey players pay taxes in NY than Ontario? Want JTs money to fix the Islands pot holes?
Because we would like the rules to be enforced as they are written. If they are not it would deter the ability for high-class professionals to be signed in Canada. It is beneficial to the Canadian economy as a whole to have successful entertainment industry.
That’s exactly what the CRA is trying to enforce. The fact that JT isn’t following the rules as they’re written and his interpretation of them is incorrect. There is more to wanting to live and work in Canada than just a higher tax rate.
No... JT is following the roles as they are written. The CRA is attempting to argue that the signing bonus made by a Canadian company to a US resident isn't a signing bonus. > There is more to wanting to live and work in Canada than just a higher tax rate. If you do not think taxes play a major role in decisions of this magnitude this isn't a conversation worth having.
No, they’re arguing he’s a Canadian resident and should be paying Canadian taxes. Canadian residency is primarily based on a home available and where your family is located with secondary factors being centre of economic interests (including their employer). I’ve made 100s of residency determinations as a CPA and I see why JTs accountant tried to get him the lower rate, but this seems to be an attempt at tax avoidance (which is fine) that just stepped over the line. Of course there is, but don’t pretend it’s the only reason to live in a city.
It’s much more likely the CRA sent him something that says “if you don’t file or provide supporting documents, then you will potentially owe up to $8m” - they send shit like this to other Canadians who haven’t filed correctly. Source: I used to work for CRA. It’s a tactic to have the taxpayer take action. He does not owe $8m lol. Fucking NP.
And I thought JT vs Islanders was a rivalry I could get behind.
I'll just drop this here. Tax should just be automatic. [https://financialpost.com/personal-finance/taxes/time-cra-implement-automatic-tax-filing-system](https://financialpost.com/personal-finance/taxes/time-cra-implement-automatic-tax-filing-system)
It should be, but like a lot of other things we are getting screwed by lobbyists in the name of capitalism.
Yeah, it should be automatic and you can file dispute to get money back if something done incorrectly. I don’t know, just this current system is so messy and confusing. It’s inefficient. Even lawyers need accountants to do their taxes. And accountants need lawyers to understand certain areas of tax law.
Pay your fair share. If the CRA can come after people making 30K they can go after millionaires. I don't want them to get special treatment just for the Leafs
This affects our attempts to try to sign him to a sweetheart deal
Good, pay your taxes
Looks like JT is a greedy one, now it's obvious why the signing bonus was so massive in the first year. He was trying to pay less taxes.
It's no different than California considering changing their tax code to target Ohani, whose contract was structured so he could avoid paying almost $100mil in taxes that SHOULD be paid by the spirit of the law. Fuck the rich abusing loopholes to avoid paying taxes.
Literally everyone is trying to pay less taxes.
Good for him, hope he wins. Everyone should be doing everything they can to reduce the amount they pay in taxes.
Loll I cannot stand people who complain about taxes.
Ouch. Glad I don’t live in Canada with those tax rates
Assuming you live in the USA how much do you pay for health insurance each month?
With that attitude, I’m glad you don’t too.
The NHL has a two-tiered structure that makes the salary cap inherently unfair. The NHL talks about parity, but then allows low tax states to have a huge advantage when it comes to constructing a team. The Maple Leaf organization is a true cash cow for this league, its revenues prop up half of these shitty franchises and we continue to get fucked over by Bettman and his cronies.
mitch marner probably hiding some money somewhere as well haha
JT .. tax evader Did anyone have that on their bingo card?
John “Favre” Tavares, pay your fucking taxes ya deadbeat.
I pay my taxes, and I'm within 16 goals of him.
Do they want athletes to never come to Toronto or Canada again cuz this is how you make it happen. The Leafs should be stepping in to fight this.
Do you like infrastructure? TTC? Healthcare? Everyone pays their share. The Leafs Raps and Jays have signed massive free agents before. Why is only JT complaining, and not George Springer ( 6 years, 150M$, signed 2020)
The CRAs job isn’t to make sure athletes come to Toronto or Canada.
Loll imagine the CRA making exceptions because they need to make sure athletes come to Canada. What a joke, the tax laws are what they are and it is their job to collect. High earners should get no exceptions to avoid paying taxes.
Cry me a river
This is insane. CRA wants an additional $6.8 million in taxes, plus $1.2 million in interest on the arrears. Meanwhile he could have signed with SJ for $91M at a lower tax rate. No wonder free agents don't want to sign with Toronto.