Canadian Revenue Agency ruling on signing bonuses

[x Tame Impala]

I know I wouldn't be able to sleep comfortably with only 7.5 million dollars a year. How does he even afford rent?

There are roughly 1.48 million + registered hockey players in the world right now. Draisaitl is minimally a top 5-10 player in the world.

Ice hockey players per country worldwide 2023 | Statista

In the 2022/23 season, the United States had the most registered ice hockey players out of any country worldwide.

www.statista.com

Are you in the top .0000001% of your career field? Is that field incredibly valuable to millions of consumers and part of a $5Billion+ growing consumption market? No, i'm assuming you're not.

People deserve to be paid for being amongst the best at what they do. I would imagine most people at Draisaitl's comparative level in their respective fields are making a lot more money that what's needed to "pay their rent".

 

[Albatros]

The mafia also works under the principal of pay up an exorbitant amount or something could happen to your private property.

You want to run a country that way, you're free to do so, but you'll have no high earners wanting to move into your country and the ones who are there will eventually leave over time if your who concept is to be outright hostile to that group. Especially when the weather is not great to begin with.

And then good luck with tax revenue, then all the folks making 35k-75k+ are going to realize they have to actually pay a lot more taxes because they were actually getting a sweet deal before getting way more services than what they paid into. Either that or their services are going to be cut massively (also good luck retaining doctors in the first place).

Unfortunately you have no reliable way to persuade others to respect your ownership claims, only the government is able to do that. Given that in this system some amass greatly more wealth than others, it is only right that they as the main beneficiaries pay substantially more for financing its existence - for a person without significant property does not need its protection. Access to that doctor may be the only thing that keeps some of them from robbing you blind.

As appealing as the weather may at times be, few tax havens have sustainable economies of their own and it would seem unwise to cut ties to the source of the wealth when relocating there.

 

[Fire Sweeney]

It does suck for Canadian NHL teams and fans that we have this huge handicap.

We should have a list of the top earners in the league after taxes

It sucks a lot more for the athletes. Being robbed of millions, playing for a team that won't win the cup, in front of mostly mentally insane fans.

 

[Vancouver_2010]

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

thats fine, but thats why a lot of players dont want to play for Canadian team

 

[Soundwave]

Unfortunately you have no reliable way to persuade others to respect your ownership claims, only the government is able to do that. Given that in this system some amass greatly more wealth than others, it is only right that they as the main beneficiaries pay substantially more for financing its existence - for a person without significant property does not need its protection. Access to that doctor may be the only thing that keeps some of them from robbing you blind.

As appealing as the weather may at times be, few tax havens have sustainable economies of their own and it would seem unwise to cut ties to the source of the wealth when relocating there.

High income earners DO already pay far more, a huge chunk of Canadian's don't even pay any income tax or barely any tax and get the benefit of a robust social security net that people in many countries can't even dream of. That money doesn't magically come from nowhere. It's not like this is something that needs to be in the process of happening, that how it works *now*, without it more than half the shit the government spends on wouldn't be feasible. Public healthcare would fall apart.

Everyone and their grandma knows the US is right next door with far better weather, lower taxes, and protection of property is no big deal. "You should give us 50%+ of your income because we have some secret sauce here and only here" is becoming empty rhetoric when you bring nothing else to the table.

Even the whole idea of "well our banks are reliable" is an outdated concept in the modern world, today anyone can open a Questtrade account or whatever and run their own portfolio, you don't need to bend over and drive all the way down to your BMO, TD, CIBC, etc. bank where they and only they know how to invest money (frankly they likely will do a worse job of it).

 

[Mattilaus]

There are roughly 1.48 million + registered hockey players in the world right now. Draisaitl is minimally a top 5-10 player in the world.

Ice hockey players per country worldwide 2023 | Statista

In the 2022/23 season, the United States had the most registered ice hockey players out of any country worldwide.

www.statista.com

Are you in the top .0000001% of your career field? Is that field incredibly valuable to millions of consumers and part of a $5Billion+ growing consumption market? No, i'm assuming you're not.

People deserve to be paid for being amongst the best at what they do. I would imagine most people at Draisaitl's comparative level in their respective fields are making a lot more money that what's needed to "pay their rent".

Cool story, and also totally irrelevant when discussing paying your fair share of taxes.

 

[Toby91ca]

There are roughly 1.48 million + registered hockey players in the world right now. Draisaitl is minimally a top 5-10 player in the world.

Ice hockey players per country worldwide 2023 | Statista

In the 2022/23 season, the United States had the most registered ice hockey players out of any country worldwide.

www.statista.com

Are you in the top .0000001% of your career field? Is that field incredibly valuable to millions of consumers and part of a $5Billion+ growing consumption market? No, i'm assuming you're not.

People deserve to be paid for being amongst the best at what they do. I would imagine most people at Draisaitl's comparative level in their respective fields are making a lot more money that what's needed to "pay their rent".

Your point still stands, but I think you have to multiply your % by about 3-4,000 to get the correct percentile.

 

[Soundwave]

There are roughly 1.48 million + registered hockey players in the world right now. Draisaitl is minimally a top 5-10 player in the world.

Ice hockey players per country worldwide 2023 | Statista

In the 2022/23 season, the United States had the most registered ice hockey players out of any country worldwide.

www.statista.com

Are you in the top .0000001% of your career field? Is that field incredibly valuable to millions of consumers and part of a $5Billion+ growing consumption market? No, i'm assuming you're not.

People deserve to be paid for being amongst the best at what they do. I would imagine most people at Draisaitl's comparative level in their respective fields are making a lot more money that what's needed to "pay their rent".

Pro atheltes are worth every penny they make generally speaking.

They generate *hundreds of millions* sometimes billions of dollars in revenue because they are the best at what they do at a highly entertaining line of work, I would not pay 10 cents to watch a group of owners play hockey, in fact you'd probably have to pay *me* to waste 2 1/2 hours of my time to watch that.

If you generate that much revenue for other people, you're entitled to get a good size cut of it too.

Same thing with people who whine and moan about movie stars getting salary, if an actor is bringing like $100+ million in additional box office or more by being in a movie, they are 100% warranted in asking for $20+ million in salary. You can take Tom Cruise out of Top Gun Maverick and like him or not, the movie maybe makes 1/10th of its total if its lucky.

 

[x Tame Impala]

Cool story, and also totally irrelevant when discussing paying your fair share of taxes.

$7.5m in taxes is a ton of money. I’m not sure what you’ve accomplished in life but I would imagine most people who’ve made it to that level wouldn’t be happy about paying that much in taxes. “Fair” is entirely arbitrary

 

[Albatros]

High income earners DO already pay far more, a huge chunk of Canadian's don't even pay any income tax or barely any tax and get the benefit of a robust social security net that people in many countries can't even dream of. That money doesn't magically come from nowhere. It's not like this is something that needs to be in the process of happening, that how it works *now*, without it more than half the shit the government spends on wouldn't be feasible. Public healthcare would fall apart.

Everyone and their grandma knows the US is right next door with far better weather, lower taxes, and protection of property is no big deal. "You should give us 50%+ of your income because we have some secret sauce here and only here" is becoming empty rhetoric when you bring nothing else to the table.

Even the whole idea of "well our banks are reliable" is an outdated concept in the modern world, today anyone can open a Questtrade account or whatever and run their own portfolio, you don't need to bend over and drive all the way down to your BMO, TD, CIBC, etc. bank where they and only they know how to invest money (frankly they likely will do a worse job of it).

And that's how it should be, the rich get social security in the form of protected private property, and the less wealthy get social security in the form of protected standard of life. Both win, and as both ends of the spectrum have something to lose, social order is preserved. Obviously you're free to relocate to the US if you so wish, but already there the social contract functions significantly worse in a lot of places. You can also open any account you wish, but the wealth is still ultimately generated in countries like Canada rather than the British Virgin Islands. Therefore relocating to a tax haven is unlikely to be sustainable in the long term.

 

[Soundwave]

And that's how it should be, the rich get social security in the form of protected private property, and the less wealthy get social security in the form of protected standard of life. Both win, and as both ends of the spectrum have something to lose, social order is preserved. Obviously you're free to relocate to the US if you so wish, but already there the social contract functions significantly worse in a lot of places. You can also open any account you wish, but the wealth is still ultimately generated in countries like Canada rather than the British Virgin Islands. Therefore relocating to a tax haven is unlikely to be sustainable in the long term.

They are basically at the roof of what they can charge tax wise. If they go any higher with tax rates they will become more and more noncompetitive with the US and natural resource (oil, gas, etc.) centric economies are not doing as great anymore, it's not the bedrock it was in the 90s/2000s.

If Canada was actually smart they should try and *increase* their pool of wealthier/higher income residents by offering easier immigration and more reasonable taxes for those people (relative to the US) and try to encourage more investment with good capital gains rates.

Having a larger pool of high income people can lead to greater tax revenues overall, too many people fixate on this as some stupid need to "punish" people who are successful even if it cuts their own nose off in the process.

 

[Kocur Dill]

In other news...

"taxation is theft." - Dr. Ron Paul.

 

[Mattilaus]

$7.5m in taxes is a ton of money. I’m not sure what you’ve accomplished in life but I would imagine most people who’ve made it to that level wouldn’t be happy about paying that much in taxes. “Fair” is entirely arbitrary

No it isn't. Fair has been determined as what he is paying. He or you can disagree with that all you'd like, but that is what we, as voters, have determined is fair by voting in the politicians we have for the last however many decades. If he or you don't like it, you are free to live somewhere else or rally people to vote in a different way next election, but that's an entirely different discussion and one not fit for a message board that strives to avoid political debate.

 

[mouser]

Yes the top earners in Canada pay most of the tax, problem is that Tavares wants to be a top earner and not pay taxes on a big chunk of income.

I don't pretend to be a tax expert but I don't think so. If you are working in Canada for a Canadian company you pay taxes in Canada.
If he didn't play because of LTIR the bonuses would be covered by insurance (if the contract is insured).
Why would you not think that bonuses shouldn't be part of a persons income? Everyone else pays tax on bonuses, it would be a major tax loophole otherwise. Companies would pay all of their employees in bonuses if they were exempt to avoid the payroll taxes CPP and EI liability.

For clarity here: if Tavares was injured and on LTIR, insurance would not be paying his signing bonuses. The Maple Leafs would still be paying Tavares his signing bonuses, and the contract insurance would be reimbursing the Leafs a % of the payments.

Might sound like nitpicking, but this is an important distinction when discussing taxes, especially when considering insurance payments are generally not taxable.

 

[PromisedLand]

that makes me curious, is the IRS actually 6x more efficient? I guess you'd have to measure the rate of tax fraud/money laundering/etc. per capita too.

my impression was that white collar crime is everywhere in America and thus the IRS is always fighting an uphill battle. but it'd nice to see actual analysis.

Based on publicly available data from gov departments in US and Canada it does seem so. US is also very productive in their work force while Canada not so much. Plenty of news recently about it.

White collar crime is also there in Canada, only difference is how good of a lawyer/law firm you got

Look, I don't know a damn thing about the CRA. It probably sucks.

However, the IRS having 1/6th as many agents only makes them 6 times as efficient if they actually do an equally good job.

And let me tell you, I dunno about the CRA, but the IRS is not doing a good f***ing job.

I wouldn't know man. i am just going based off of publicly available information. If you are an American who files taxes in the US you obviously would know more than us in Canada unless someone of us are internationally certified accountants (I am not LOL). But I gotta tell you in Canada when we call in for any questions the wait time is about 6 hours on avg, and then after waiting 6 hours they usually tranfser us to another "person" who would know about our question that just adds to the wait time LOL

 

[I Hate Blake Coleman]

$7.5m in taxes is a ton of money. I’m not sure what you’ve accomplished in life but I would imagine most people who’ve made it to that level wouldn’t be happy about paying that much in taxes. “Fair” is entirely arbitrary

No one is happy about paying taxes. Why are you caping for rich people, are you rich?

 

[Figgy44]

that makes me curious, is the IRS actually 6x more efficient? I guess you'd have to measure the rate of tax fraud/money laundering/etc. per capita too.

my impression was that white collar crime is everywhere in America and thus the IRS is always fighting an uphill battle. but it'd nice to see actual analysis.

Or... it's that the Canadian tax system has rapidly gotten more complicated than expected. For instance, taxation via residency sounds fair and interesting, until you realize how much more grey area there is for that vs taxation via citizenship that many other countries employ.

Canada's T1 summary (ie: T1 jacket) is as long if not longer than the full tax return documentation in certain European countries. It's almost always 8 pages. A US 1040 or 1040 SR is between 2-6 pages long if I remember correctly.

The world is becoming more international and Canada is on the forefront in protecting the Canadian taxpayer base with rules/interpretations in the last 5-6 years. The problem is that this has added significantly to the complexity in that period of time.

You are better off taking claims of that poster with a grain of salt. I do not get the impression he/she puts much homework into them.

In the specific case of IRS vs CRA, it's hard to compare apples to oranges. AFAIK IRS doesn't administer local taxes (state income/state sales/municipal sales). CRA does. There could be other programs that CRA administers and IRS doesn't. Economies of scale are also on IRS side here. Interesting question for sure, but not on the basis of "data" in the post you quoted.

Agreed. I don't believe believe the CRA is significantly better or worse than the IRS for efficiency. I'd argue that the complexities of the Canadian tax system, less regional tax administration and economies of scale are appropriate reasoning for the per capita difference vs the IRS.

 

[Alexei Yashvalev]

$7.5m in taxes is a ton of money. I’m not sure what you’ve accomplished in life but I would imagine most people who’ve made it to that level wouldn’t be happy about paying that much in taxes. “Fair” is entirely arbitrary

Put it this way, being rich is of very little use without a society.

There's only so much inequality people will tolerate before the pitchforks come out, historically speaking. If 99 people have nothing and 1 guy has everything the 99 people usually decide to kill the guy and take his stuff. They rarely care about what he accomplished.

 

[Fantomas]

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

Baffles me why any high income earner would be caught dead in Canada. Athletes aside, who have no choice.

 

[Hockey Outsider]

It doesn't effect him as he doesn't reside in Germany. Canada, to my recollection, is one of if not the only country that allows for tie-breaking from their country. The US doesn't even allow it for its citizens.

Again, this is a VERY particular and exceptional issue that is occurring between Canada and Tavares. It has no effect on anyone else, except any Canadian who tie-breaks from Canada, to go and live and work in the US, and then returns to play for a Canadian-owned entity and receives a signing bonus.

I'm still reviewing the facts of this case, but based on my preliminary read, I agree with your second paragraph. This appears to be a very narrow issue, confined to a fairly specific set of facts. (Elsewhere on the internet, I've read people complaining that this will be catastrophic in terms of Canadian teams attracting free agents, but I don't see how that can be the case here).

Tavares is just being made a side show. Marner got similar if not better signing bonuses why is CRA not going after him? Same with McDavid? Basically Canandian players that got hefty signing bonuses but CRA not going after them? I think Tavares' accountant/asset manager effed up big time.

These are completely different fact patterns. Based on publicly available information, it appears that Tavares was, for income tax purposes, a US resident at the time he received the signing bonus. Marner and McDavid weren't. That's why all of these cross-border tax issues affect Tavares, but not Marner and McDavid.

 

[Toby91ca]

Baffles me why any high income earner would be caught dead in Canada. Athletes aside, who have no choice.

For me personally, it's because it's Canada, it's home.

 

[x Tame Impala]

No one is happy about paying taxes. Why are you caping for rich people, are you rich?

Caping for rich people? LOL. I don't know, why are you simping for non-rich people? What does that even mean?

Put it this way, being rich is of very little use without a society.

There's only so much inequality people will tolerate before the pitchforks come out, historically speaking. If 99 people have nothing and 1 guy has everything the 99 people usually decide to kill the guy and take his stuff. They rarely care about what he accomplished.

Thankfully we don't live in an all or nothing society.

 

[ottawa]

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

If people want to earn millions and dodge taxes then yes, they can f*** right off. I don't get the millionaire worshipping.

The IRS may not tax as much depending on where you live but, just like the CRA, they will also want their cut.

 

[Toby91ca]

These are completely different fact patterns. Based on publicly available information, it appears that Tavares was, for income tax purposes, a US resident at the time he received the signing bonus. Marner and McDavid weren't. That's why all of these cross-border tax issues affect Tavares, but not Marner and McDavid.

I don't have all the intimate details and flipping through pages of proceedings in the Tavares case, but I do not believe the issue has much to do with his residency. Being a US resident does not avoid paying Canadian taxes. You'll owe taxes on world wide income if you are a resident of Canada (you'll get foreign tax credits to reduce any potential Cdn tax owing of course).....or, if you are not a resident of Canada, but are earning money from a Canadian company, you will also have to pay tax in Canada. If you think about it, a Canadian company (The Leafs for example) could pay someone (Tavares for example) a bunch of money and get a tax deduction for that and then if Tavares pays no Canadian tax on that then the gov't basically paid for some of his salary.

In the sports world, Canadian teams can be seen as being at a disadvantage to be able to sign a US resident to a contract if the tax rates are higher in the Canadian market vs. US markets. This is where the 15% tax treaty thing came into play. If you are paying a player a bonus, which would be considered an "inducement" to bring the player into or back to Canada, that can be taxed at the reduced rate of 15%. That is the main issue in the Tavares case, not necessarily residency. Tavares camp is arguing the signing bonus was an inducement, non-refundable, not actually tie to performing duties. The CRA is arguing it's normal compensation. That the key here, and it gets somewhat non-sensical when you are trying to argue $15M is an inducement, not tied to performing my job, for my job, my income there is just the $600K.

 

[The Gr8 Dane]

Thread number 167 filled with canadians crying like babies