Canadian Revenue Agency ruling on signing bonuses

[Orfieus]

https://athlonsports.com/nhl/toronto-maple-leafs/report-john-tavares-leave-toronto-legal-battle-cra-contract

This may have massive repercussions for Canadian teams to get Canadian players back into Canada

Click to read more...

 

[Figgy44]

Hmm... so the article is claiming the CRA are actually trying to argue the legalese of the definition of the type of income rather than the residency at the time? What a bizarre approach.

https://ca.rbcwealthmanagement.com/documents/2081581/2081642/Signing_Bonus.pdf/871a358b-3de9-4143-9f82-17c6dee3eac1

Here's a link in layman terms about the signing bonus. Tavares' camp does have a point if he is not considered a resident for tax purposes prior to receiving the signing bonus in cash. This is further supported by the fact he filed US taxes while playing for the Isles (IIRC it's been mentioned he was a non-resident of Canada for tax purposes prior to signing the TML contract). Even the above RBC link words things in a manner that points at this. So if he received cash on July 31 and he is considered a resident as of September, then he's OK. But if he received cash on July 31 and he is considered a resident as of July 31 or earlier, he is hooped.


The CRA arguing the money was up front compensation for his services for the remainder of the season is certainly bizarre. They're basically going off in a direction that hasn't been pursued before. Like I said, I assumed the entire fight about the specific date that Tavares' was considered a resident for tax purposes in Canada. If this goes through, this is going to mess up a ton of contracts (not just sports) in general and people are rightfully going to be pissed off.

Keep in mind, Canada doesn't tax based on citizenship. Canada taxes based on residency status for tax purposes.

 

[leafsfan5]

f*** the CRA

 

[Silky Johnson]

CRA is correct. It really is payment for services provided. Those services are taking place when he was a Canadian tax resident.

 

[HockeyVirus]

I hope he wins so I don't have to pay taxes when I get my 15M signing bonus

 

[Fatass]

Lawyers on both sides bank money. Taxpayers pay for that. Crazy.

 

[I Hate Blake Coleman]

f*** the CRA

Yes, just not for this reason. Millionaires should pay their fair share.

 

[smytty]

I have to say I don't know any more about tax laws than the average person does, but to me the CRA seems right. He's being paid to play hockey in canada. He's a Canadian resident for the duration of the contract, to me it seems he should be paying Canadian taxes. The bonus seems to be just upfront payment for him to do his job. Paying a lump sum up front just seems like a way to dance around the rules, it shouldn't affect the tax he has to pay. It should be treated as salary.

 

[CaptainBenn]

f*** the CRA

as someone who hates the CRA and pays a shit ton of taxes, I agree

but no sympathy for these multi-millionaire sports players lmao. Pay your dues f***ers

 

[SupremeTeam16]

Moral of the story, don’t be a high income earner in Canada if you can help it.

 

[Three On Zero]

More of the story, have a good accountant if you’re a multimillionaire

 

[Prairie Habs]

Moral of the story, don’t be a high income earner in Canada if you can help it.

The CRA doesn't like it when low income earners file their taxes incorrectly either.

 

[sansabri]

Moral of the story, don’t be a high income earner in Canada if you can help it.

everyone pays taxes

 

[Javaman]

My preference is for the players on my favourite team not to look for loopholes to avoid paying their fair share of taxes. I have no problem losing out on FAs over this issue.

 

[SupremeTeam16]

The CRA doesn't like it when low income earners file their taxes incorrectly either.

You think he filed his taxes incorrectly? You think he doesn’t have a team of accountants and tax lawyers who pored over every detail of the contract to ensure it was structured in accordance with tax codes?

The contract was structured and signed in accordance with the rules laid out in the tax treaty betwen the US and Canada. In this case it’s the CRA who has assessed him incorrectly and now they’re trying to make the argument for why this bonus should be taxed as regular income instead of in the long standing manner that signing bonuses and other inducements for athletes, artists, actors and musicians are taxed which is very clearly laid out in the above mention tax treaty.

 

[Voight]

The CRA doesn't like it when low income earners file their taxes incorrectly either.

They refused to accept a relative of mines deduction for his TTC transit pass because he didn't keep every single receipt from when he bought it monthly. He was a student at the time.

They hounded him for months about it, great use of resources I tell ya.

 

[SupremeTeam16]

everyone pays taxes

My wife and I don’t. Not income or capital gains taxes at least.

 

[Shane Diesel]

My wife and I don’t. Not income or capital gains taxes at least.

You most certainly pay property and/or sales taxes.

 

[Prairie Habs]

You think he filed his taxes incorrectly? You think he doesn’t have a team of accountants and tax lawyers who pored over every detail of the contract to ensure it was structured in accordance with tax codes?

The contract was structured and signed in accordance with the rules laid out in the tax treaty betwen the US and Canada. In this case it’s the CRA who has assessed him incorrectly and now they’re trying to make the argument for why this bonus should be taxed as regular income instead of in the long standing manner that signing bonuses and other inducements for athletes, artists, actors and musicians are taxed which is very clearly laid out in the above mention tax treaty.

They didn't file in accordance with the rules, they filed in a way they thought could subvert the rules. I feel no pity for millionaires who have to pay their fair share.

 

[LemonSauceD]

Moral of the story, don’t be a high income earner in Canada if you can help it.

U do realize many big name European countries, Asian countries, and many highly populated states have higher taxes than Canada.

 

[SupremeTeam16]

You most certainly pay property and/or sales taxes.

I most certainly do. 12% VAT which is basically a sales tax and 1% annual property tax on the value of my house. My wife also pays 10% social security on her income.

 

[Bounces R Way]

Signing bonuses will now be paid out in the NHL's new cryptocurrency BettmanBuck$

 

[overlords]

Yes, just not for this reason. Millionaires should pay their fair share.

Enemy of my enemy is my friend and I'm far closer to being a millionaire than a stooge for the CCP

 

[Saskatoon]

It seems pretty bold to claim you are a US resident performing in Canada when you are a Canadian who played for Team Canada playing for a Canadian hockey team

 

[Garbageyuk]

Just pay your f***ing taxes, Johnny Boy. What an entitled little shit.