Idea re taxes and salary cap

[Legion34]

If you're argument is Cash in Hand then sure, I can agree with you. But this is all about a benefit of avoiding taxes. The point was from the start was that the RCA provides a benefit that evens out the tax advantage. A person doesn't have to spend the whole time in the tax free state, just a little over a half a year to be considered a resident. Plenty of snowbirds do this already, so I find it hard to believe a young~ish player who is worth millions wouldn't want to spend 6 months out of the year in Miami or Tampa with sunny weather and a mass amount of wealth.

This is the point. You are personally deciding that you think you would like to live somewhere tax free and retire there. You aren’t the one doing it.

I could easily say “well if I just don’t pay any taxes then I can even out the taxes benefits too”

The only way to make it “even” is to lock up money and take it out in a dribble and be forced to leave a country and determine where
You want to live 15 years in advance.

that’s only if the government allows it. Every year you have to prove to the government why your financial ties are more to this tax
Free state.

the government wants its money. It’s not nearly as simple as people are making it out to be


If it was. Agents. GMs coaches players and accounting firms wouldn’t be talking about the massive advantages

 

[Legion34]

I personally hate RRSP's. But won't knock anyone who contributes to them.

wait so you personally hate RRSPs but you expect players to pay into RCA?

 

[Jack Burton]

Become a Canadian citizen and spend 6 months less 1 day out of the country and you will pay zero income tax.

 

[DistantThunderRep]

This is the point. You are personally deciding that you think you would like to live somewhere tax free and retire there. You aren’t the one doing it.

I could easily say “well if I just don’t pay any taxes then I can even out the taxes benefits too”

The only way to make it “even” is to lock up money and take it out in a dribble and be forced to leave a country and determine where
You want to live 15 years in advance.

that’s only if the government allows it. Every year you have to prove to the government why your financial ties are more to this tax
Free state.

the government wants its money. It’s not nearly as simple as people are making it out to be


If it was. Agents. GMs coaches players and accounting firms wouldn’t be talking about the massive advantages

Are you going to complain that Matthews primary residence is in Arizona, so he gets taxed all his Bonus in Arizona's income tax?

 

[Legion34]

Become a Canadian citizen and spend 6 months less 1 day out of the country and you will pay zero income tax.

nope. You have to prove that your economic ties
Are greater to the other
Country. It’s not like that at all.

 

[DistantThunderRep]

wait so you personally hate RRSPs but you expect players to pay into RCA?

I am no where near wealth enough to benefit from something like this. RCA's are primarily for wealth people. CEO's, Athletes, etc...not for us common folk.

 

[DistantThunderRep]

nope. You have to prove that your economic ties
Are greater to the other
Country. It’s not like that at all.

If you don't own a home under your name in Canada or own a home in the states. Plus you have a driver license in the states. Its surprisingly easier than you think.

 

[tarheelhockey]

The amount of effort spent whining about one variable of the thousands is absurd.

It says something about how fair the current system is when nitpicky things like this get so much attention.

 

[Legion34]

If you don't own a home under your name in Canada or own a home in the states. Plus you have a driver license in the states. Its surprisingly easier than you think.

Not according to NHL accountants. One actually said that most of his American players can’t do it long term.

1.) kids in school count
2.) car lease counts
3.) kid born in Canada counts
4.) where you make your money
5.) long term lease counts.

this is according to the accountant. It’s easy in theory. But in practice not so much. A playoff
Run where Edmonton plays Winnipeg all adds up.

having a family and not having a stable house etc adds up. Meeting a local partner adds
Up.

a guy like Matthews MAY be able to do it. He is single. But endorsement events may make it harder.

and I would have no problem considering Matthews as part of a cap calculation to even things up.

 

[Golden_Jet]

It says something about how fair the current system is when nitpicky things like this get so much attention.

It’s all about the Leafs not being able to keep all their income as cash on hand (in case you need it).
Even though with their signing bonuses they can keep 85%. Leaf players should not have to pay taxes, not seeing the other Canadian teams complaining, when they have a lot more to complain about.

 

[AnCatDubh]

Establishing tax residency in a foreign jurisdiction isn’t hard. There are certainly lots of steps to follow, but a good international tax account/lawyer can help you do it.

 

[Legion34]

Establishing tax residency in a foreign jurisdiction isn’t hard. There are certainly lots of steps to follow, but a good international tax account/lawyer can help you do it.

NHL players and accounts disagree.....

 

[nbwingsfan]

Can we all just agree Legion34 has no idea what hes talking about and we all ignore him so he can stop posting nonsense?

Poor Toronto has to pay taxes so the League is out to get them

Lets just ignore the countless advantages them (and other teams) have over other teams though too

 

[AnCatDubh]

NHL players and accounts disagree.....

I’m not an NHL player. But I am a CPA in public practice for almost 30 years.

 

[Legion34]

I’m not an NHL player. But I am a CPA in public practice for almost 30 years.

do you have NHL clients or similar? I’m not an accountant of course. So you would know more than me. But Accountants with NHL clients have gone on the record saying how hard it is for their clients to keep up residency while working in Canada/ living through school year.

 

[Lazlo Hollyfeld]

What if the teams that were in high tax states/provinces were allowed dispensation for a certain number of contracts to add a certain amount to their cap? Say three contracts, they could add 250k each to cover additional taxes (which they would then pay the player presumably)?

How Much Do NHL Players Really Make? Part 2: Taxes

There's no way any of those "effective" tax rates are accurate.

For starters those aren't effective tax rates. It looks like all they've done is added the marginal federal and state/province tax brackets together and multiplied that by salary. Taxes are progressive. You don't pay the highest marginal bracket on all your income. You pay it only on the money above that bracket (which for NHL players will be the majority of their income, but still).

And I guess players don't take any deductions? There's caps on it now but you can still deduct state and local taxes on your federal return. Agents/managers fees reduce gross income..

I'm far from a tax expert but the point being that this tax argument is stupid not only because it's one of countless factors in which team a player signs for, it's also that the numbers used in these argument are incredibly flawed.

 

[Legion34]

Can we all just agree Legion34 has no idea what hes talking about and we all ignore him so he can stop posting nonsense?

Poor Toronto has to pay taxes so the League is out to get them

Lets just ignore the countless advantages them (and other teams) have over other teams though too

orrrrrr

You want to agree to ignore the statements and quotes of NHL agents GMs, accoutants, and players. Who indicate that tax breaks DO have massive advantages and lead to unfair cap advantages.

professionals who have openly spoken about the advantages due to direct experience that I used to base my opinion are.

Connor mcdavid
Jason spezza
Marc methot
Jamie benn
Alex radulov (agent)
Jeff petry (agent)
Brian Burke
Kyle dubas.
Bob mckenzie
Darren dreger
Mike weaver
Mike johnson
Gavin sports group.
Joe resnick
Lewis gross
Don Meehan.
David poile.

among many others. No player has discounted tax advantages that I have ever seen. Only 1 agent has.

All the above agree with me. That’s why I have this opinion. Because the people
Involved said so. You can google if you like. The only thing I provided first hand knowledge of was RCA and RRSP.

The fact is that tax advantages are real. People can come up with theoretical ways to even the playing field but they are incredibly unrealistic and do not seem to be feasible to the actual players making the decision

if you all want to agree to ignore reality because “boo hoo Toronto makes money”. I mean. Be my guest. But at least be honest about it.

 

[mouser]

RCAs are NOT the be all end all. Many financial planners recommend them. Sure. Not all. They can work for some to mitigate some of the losses that would be created by tax differences. IF you are willing to jump through big hoops.

But in NO WAY do they Ever trump cash in hand.

10 million cash in hand today is better than 2 million a year over 5 years. It is WAY better to have 10 million in hand rather than
-pay 50% tax on 5
-defer taxes to probably pay the same in another year.

IF a player in Canada takes out that money while playing in a Canadian market. They get taxed the same on it. NO savings. That means they have to hold the money until they retire. That robs them Of financial flexibility.

Cash in hand is better then an equivalent amount in many cases, but I think you’ve been using a false equivalency here because the amounts aren’t equal.

What you should be comparing is $10m cash in hand (after paying ~50% taxes in Toronto) vs $20m in a RCA (tax deferred). With the possibility via proper tax planning to eventually pay much less then 50% in taxes on that $20m as your RCA investments grow tax deferred.

People regularly invest in tax deferred retirement savings (investment) programs from RRSP’s to 401k and IRA’s. What makes the RCA so unique is there is no minimum age requirement before withdraws are allowed without penalty, and contributions can be orders of magnitude higher then the other options.

 

[NOTENOUGHJTCGOALS]

I personally hate RRSP's. But won't knock anyone who contributes to them.

There's a sucker born every minute. RRSPers are the flat earthers of finance.

 

[nbwingsfan]

orrrrrr

You want to agree to ignore the statements and quotes of NHL agents GMs, accoutants, and players. Who indicate that tax breaks DO have massive advantages and lead to unfair cap advantages.

professionals who have openly spoken about the advantages due to direct experience that I used to base my opinion are.

Connor mcdavid
Jason spezza
Marc methot
Jamie benn
Alex radulov (agent)
Jeff petry (agent)
Brian Burke
Kyle dubas.
Bob mckenzie
Darren dreger
Mike weaver
Mike johnson
Gavin sports group.
Joe resnick
Lewis gross
Don Meehan.
David poile.

among many others. No player has discounted tax advantages that I have ever seen. Only 1 agent has.

All the above agree with me. That’s why I have this opinion. Because the people
Involved said so. You can google if you like. The only thing I provided first hand knowledge of was RCA and RRSP.

The fact is that tax advantages are real. People can come up with theoretical ways to even the playing field but they are incredibly unrealistic and do not seem to be feasible to the actual players making the decision

if you all want to agree to ignore reality because “boo hoo Toronto makes money”. I mean. Be my guest. But at least be honest about it.

Literally no one has said there isnt an advantage.

Theres also massive advantages to being in New York/Boston/Toronto versus say Detroit or Columbus

Theres also massive sponsorship advantages depending what team you are

There are massive off-ice facility advantages depending what team you are

There are massive climate advantages depending what team you are

There are massive momentary advantages not listed depending what team you are

If youre going to start adjusting cap to teams with higher taxes then you better start adjusting for say Toronto getting players from Ontario and the sponsorship money that comes with it.

 

[Legion34]

Cash in hand is better then an equivalent amount in many cases, but I think you’ve been using a false equivalency here because the amounts aren’t equal.

What you should be comparing is $10m cash in hand (after paying ~50% taxes in Toronto) vs $20m in a RCA (tax deferred). With the possibility via proper tax planning to eventually pay much less then 50% in taxes on that $20m as your RCA investments grow tax deferred.

People regularly invest in tax deferred retirement savings (investment) programs from RRSP’s to 401k and IRA’s. What makes the RCA so unique is there is no minimum age requirement before withdraws are allowed, and contributions can be orders of magnitude higher then the other options.

I’m comparing no tax vs tax markets.

basically. Say 10 million in no tax market vs Toronto/ottawa.

tampa: 10’million at their tax rate (37%???).you get that money today. You can invest as you like. Move as you like.

Toronto you get taxed at 54%. So you can take your hit now and lose the money. ORRRRR

you can.

take 5 million now. Get taxed at 54%.
put 5 million in an RCA and try to kick the can down the road.

that does a few things.
1.) you are still paying tons of tax now on 5 million.
2.) you are limiting your money in your pocket to invest now by millions.
3.) you are locking your money up for what 10-15 years? You can’t pull it out and invest while you are still a player. That defeats the whole purpose.

Say you wait and your RCA does fine. Now what.
you take it out in Canada...... it gets taxed. If you are making money (endorsements etc) it bumps up your taxes.

or like you have said....... retire in a tax free state. Sure. Fine IFFFFF that’s what you want to do. But you have to decide that

1.) you want to stay there 15 years later (look at California now.... look at Covid in florida). What if you have a family? Now you have to decide to move when your kids are 10?

2.) what if laws change? What if RCA agreements change? What if taxes change? Look at the new proposals for taxes in the states?

3.) any taxes etc are subject to review by the Canadian government at any time

The idea that Canadian players who made money in Canada can just become non residents for the purposes of cheating their taxes is pretty far fetched. An NHL accountant has actually gone on the record saying that he advises against SB because he thinks the govt will go after his clients. Now imagine you made money in Canada and just made a BS retirement to cheat on your taxes.

this is a gamble. Money in your pocket is not.

The fact is NHL players agents GMs and accountants agree that no tax states have an advantage. We can all sit here and argue all
Day that in theory this or that could work. But it’s pretty easy to see the issues in my mind. Actual people living through it seem to agree with me.

in the event that actual NHL personnel start going to Canadian markets to take advantage of RCA. I would be happy to discuss their limitation to improve a fair cap in conjunction with tax free states corrections

 

[Legion34]

Literally no one has said there isnt an advantage.

Theres also massive advantages to being in New York/Boston/Toronto versus say Detroit or Columbus

Theres also massive sponsorship advantages depending what team you are

There are massive off-ice facility advantages depending what team you are

There are massive climate advantages depending what team you are

There are massive momentary advantages not listed depending what team you are

If youre going to start adjusting cap to teams with higher taxes then you better start adjusting for say Toronto getting players from Ontario and the sponsorship money that comes with it.

1.) MANY people are clearly saying there is not an advantage. They are saying that putting your money in an RCA neutralizes the advantage

2.) what you aren’t understanding is that in a free market system. There is NO reason to artificially impose limits on salary/money/endorsement/weather or whatever
Ridiculous thing you want to shift the goalposts to.

there is NO reason for a salary cap. There is also no reason without a cap that other teams shouldn’t have to over pay to make up the net pay.

the difference here is the NHL has artificially made the cap. So now that they have artificially made this rule. It has to be fair.

if they make an endorsement cap it has to be fair.

 

[AnCatDubh]

do you have NHL clients or similar? I’m not an accountant of course. So you would know more than me. But Accountants with NHL clients have gone on the record saying how hard it is for their clients to keep up residency while working in Canada/ living through school year.

We aren’t talking about residency while still playing. We are talking about using an RCA to (a) defer income and (b) the fact that they can take up residency in Bahamas after they stop playing so that they can extract the cash as a non-resident of Canada. CRA hates this type of planning but its within the rules

 

[Legion34]

We aren’t talking about residency while still playing. We are talking about using an RCA to (a) defer income and (b) the fact that they can take up residency in Bahamas after they stop playing so that they can extract the cash as a non-resident of Canada. CRA hates this type of planning but its within the rules

Sure. In theory. But now a 21 year old has to decide to take up residency in the bahamas
15 years from now....... and the 21 year old has to be confident the laws won’t change.

As an accountant. Would you advise

1.) 10 million cash In hand today
2.) 5 million cash in hand today and a 5’million RCA that sets you up in the Bahamas in 15 years

 

[mouser]

Sure. In theory. But now a 21 year old has to decide to take up residency in the bahamas
15 years from now....... and the 21 year old has to be confident the laws won’t change.

As an accountant. Would you advise

1.) 10 million cash In hand today
2.) 5 million cash in hand today and a 5’million RCA that sets you up in the Bahamas in 15 years

You’re continuing to use false equivalencies because (1) and (2) per you previous post are different players on different teams in different countries where (1) plays in the U.S. and (2) in Canada. Will skip over flaws in the relative math.