There goes the hometown discount. We’re cursed to shit so it doesn’t even matter.
Svalbard38
> 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.
vaporgaze2006
I hope he wins his appeal.
Unwise1
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.
Hopeful-Tank-704
Fight em John.
Ducey1984
And I thought JT vs Islanders was a rivalry I could get behind.
KroniX1969
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.
naughty-613
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.
Picklepucks
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.
geturteez
The League needs to make it fair. Every team’s salary cap should be based on the team with the lowest tax bracket.
RealBigFailure
Oh lord I leave r/Canada because of all the postmedia nonsense and it’s now in this sub
Sammydaws97
So essentially he is arguing that he was not yet a full time Canadian resident when he recieved his signing bonus in 2018 and therefore should not pay the full income tax as a Canadian.
Seems super reasonable to me. Is the CRA reaching here??
stolpoz52
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.
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.
frog-hopper
I’m always surprised when these kinds of articles come out. I suppose they’ve got some bum looking through tax court cases for “fun”.
Toddmacd
Fucking idiots.
fadedfairytale
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
confusingphilosopher
John “Favre” Tavares, pay your fucking taxes ya deadbeat.
buddyboykoda
To be fair any one who’s had a battle with CRA knows it’s like negotiating with giraffe in German, It makes no sense….
Dry_Hedgehog_8855
Ouch. Glad I don’t live in Canada with those tax rates
AustonDadthews
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.
Optimal-Bag-2046
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.
Leafs17
>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.
buktee123
This affects our attempts to try to sign him to a sweetheart deal
Multipr3neur
mitch marner probably hiding some money somewhere as well haha
terminese
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.
DeanersLastWeekend
I’m torn. In many ways we need to tax the rich more and close loopholes they used for tax evasion but at the same time I really want the leafs to attract the best talent in free agency and this surely hurts that.
Mother_Gazelle9876
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%.
Judge_Rhinohold
We need an after tax salary cap. No more unfair advantage for the Knights, Preds, Stars, Lightning and Panthers.
tooldieguy
Good, pay your taxes
d-rock92
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.
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.
damnUaMOFO69
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
This is bad for Canadian teams in signing free agents. This was a loophole to pay a chunk of any free agents salary in a lower tax bracket if they are moving from a low tax state.
man_in_the_suit
My only opinion on this is that I assume Tavares has an accountant who knows much more on this subject than I do.
42 Comments
There goes the hometown discount. We’re cursed to shit so it doesn’t even matter.
> 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.
I hope he wins his appeal.
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.
Fight em John.
And I thought JT vs Islanders was a rivalry I could get behind.
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.
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.
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.
The League needs to make it fair. Every team’s salary cap should be based on the team with the lowest tax bracket.
Oh lord I leave r/Canada because of all the postmedia nonsense and it’s now in this sub
So essentially he is arguing that he was not yet a full time Canadian resident when he recieved his signing bonus in 2018 and therefore should not pay the full income tax as a Canadian.
Seems super reasonable to me. Is the CRA reaching here??
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.
JT .. tax evader
Did anyone have that on their bingo card?
This country is truly a joke.
I pay my taxes, and I’m within 16 goals of him.
[Here is the actual CRA](https://taxinterpretations.com/content/701949) stance on this
Maybe he waives his NTC now /s
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.
I’m always surprised when these kinds of articles come out. I suppose they’ve got some bum looking through tax court cases for “fun”.
Fucking idiots.
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
John “Favre” Tavares, pay your fucking taxes ya deadbeat.
To be fair any one who’s had a battle with CRA knows it’s like negotiating with giraffe in German, It makes no sense….
Ouch. Glad I don’t live in Canada with those tax rates
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.
>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.
This affects our attempts to try to sign him to a sweetheart deal
mitch marner probably hiding some money somewhere as well haha
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.
I’m torn. In many ways we need to tax the rich more and close loopholes they used for tax evasion but at the same time I really want the leafs to attract the best talent in free agency and this surely hurts that.
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%.
We need an after tax salary cap. No more unfair advantage for the Knights, Preds, Stars, Lightning and Panthers.
Good, pay your taxes
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
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.
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
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)
This is bad for Canadian teams in signing free agents. This was a loophole to pay a chunk of any free agents salary in a lower tax bracket if they are moving from a low tax state.
My only opinion on this is that I assume Tavares has an accountant who knows much more on this subject than I do.
Pay your taxes or get the Stanley cup