Citizenship has nothing to do with it. It is residency and
He has to be able to prove he has greater financial ties to the us (days in state, cars, houses etc). He has to apply. And it does NOT say anywhere he gets his sb taxed at 15%. In fact it says that he would have to calculate what would work out better. Being a Canadian or a us resident. If it were the case that he get 15% rate in Canada as a us resident . Why would it ever work out that he would ever pay less taxes as a Canadian resident in canada?
You need to read the article again.
1.) it does NOT say that he only pays 15% tax at all. It says
He would pay 15% Canadian tax AND full Arizona taxes. But there may be some unspecified relief. That it doesn’t provide a number for.
The article suggests that the athlete would have to calculate the numbers as both a us and Canadian resident to see which is better
NO WHERE does it say that Matthews would only pay 15% on his bonus money. It says he MAY avoid DOUBLE taxes using a foreign credit. Not he will only pay 15%
If that were the case…. You honestly think players would not be in Canada in droves if they only paid 15% taxes?
Agents media players all talk about no state taxes…. Players who played in both markets talk about the differences.
You think they really didn’t know?
But an rbc advisor did?
Come on. I am sure you are a smart person. I don’t think you are reading the articles or using common sense.
Your conclusion is pretty close, I just want to clarify a few things.
Citizenship does have something to do with it. However, you have to be careful in distinctively drawing the line between Canada and USA taxation AND be careful about which perspective you are speaking from (Canada POV addressing USA taxation or USA taxation addressing Canada POV).
Canada and USA have tax regimes that are are based on different principles. Canada is based on residency for tax purposes you do not have to file automatically based on citizenship in certain situations such as if you are not residing in Canada. US citizens must file automatically based on citizenship or based on green card test or substantial presence test.
USA and Canada have a tax treaty for the avoidance of double taxation. In a nutshell, the treaty basically outlines when USA or Canada should receive the taxes from taxation. Typically, in a USA/Canada situation we are talking about here, an individual may have a situation where they must file both a USA and Canada tax return in a specific calendar year. Both Canada and USA tax returns will report the same things as it is required by law. Both Canada and USA may consider those same transactions/events to be taxable and may calculate a tax on that income. One country will receive the lion's share in taxes based on certain rules and the other will only have to pay the difference that is higher than the other country, as they receive a credit for taxes already paid to a treaty country.
Keep in mind there is a difference between filing and taxes owing and tax credit. There are difference between taxes owing (calculated) and withholding tax.
Everyone knows the other type of taxes (after you file your return). Withholding taxes on the other hand often confuse people. Withholding taxes are basically amounts legally withheld on a sum by a third party and remitted directly to the government. In essence, they are prepaid instalments on your taxes to foreigners so that a tax payer cannot run off to another country, refuse to pay taxes and leave a country, because country don't have legal jurisdiction in that other country. If you've overpaid taxes due to withholding taxes, the government refunds the excess to you after you file a tax return. But withholding taxes are for factual or deemed non-residents of Canada and vice versa USA will do the same to Canadians.
Many hockey players will have different tax situations. They are not all the same.
In Matthew's situation as the example, we don't know what the situation is. If he considered a resident of Canada for tax purpose and also has US filing obligations as a US citizen, then he may not require withholding tax if the money stays in Canada because CRA can freeze assets and garnish wages to receive what they are due.
However, if he is considered to be a non-resident working in Canada for tax purposes, then his employer (MLSE) would be required to pay him his salary and bonuses less a percentage withholding tax. Otherwise, if MLSE did not remit withholding taxes prior to paying Matthews and Matthews flees the country, the CRA can go to MLSE and enforce the rule to collect those taxes from MLSE because they did not follow the withholding tax rule and paid an amount out to a non-resident.
TBH, I don't know what these situations are. Residency for tax purposes and Canada/USA tax treaty is only two of probably half a dozen major facets of consideration for basic tax planning for an athlete like Matthews. That's not including potentially adding another half a dozen steps for more complex tax planning and consultation to further minimize taxes if he meets certain specific criteria.
