Sports

Maple Leafs captain John Tavares taking CRA to court docket in $8M tax dispute

Toronto Maple Leafs captain John Tavares is taking the Canada Income Company to court docket in a tax dispute of over $8 million.

Courtroom paperwork present Tavares filed an enchantment by way of his legal professionals final week within the Tax Courtroom of Canada in search of to have the CRA’s reassessment of his 2018 tax return annulled.

The CRA, in response to the enchantment, decided Tavares’s 2018 revenue was $17.8 million larger than reported and ordered the participant to pay $6.8 million in taxes — over 38 per cent — plus $1.2 million in curiosity.

Tavares, a 33-year-old from Mississauga, Ont., signed a seven-year, $77-million US contract to hitch his hometown Maple Leafs on July 1, 2018. He beforehand performed for the New York Islanders from 2009 to 2018.

The $17.8-million sum accounts for a $15.25-million signing bonus within the contract’s first yr, which “was integral to Tavares’ resolution” to simply accept the deal, the enchantment states. It provides the participant rejected larger gives from different groups, together with a seven-year, $91-million contract from the San Jose Sharks.

Tavares additionally thought-about taking part in for the Islanders, Boston Bruins, Dallas Stars and Tampa Bay Lightning earlier than signing in Toronto, it says.

The court docket doc states Tavares’s signing bonus “was an inducement to signal an settlement referring to the efficiency of an athlete” and shouldn’t be thought-about as wage or wages.

“The signing bonus was consideration for Tavares — a uniquely expert and sought-after unrestricted free agent — committing to the seven-year contract with the Toronto Maple Leafs,” it states.

Tax provision

The enchantment argues Tavares was eligible for the diminished charge of 15 per cent beneath a Canada-US Tax Treaty provision that units decrease charges for inducements paid to artists, musicians, actors and athletes.

The enchantment additionally states the bonus amounting to $11.4 million after deductions was deposited into Tavares’s New York Metropolis checking account and says Tavares spent 45 days in Canada from Sept. 13 to Dec. 31, 2018.

The enchantment states that, beneath the Earnings Tax Act, “signing bonuses are solely included in revenue to the extent that they will moderately be thought-about to be attributable to providers carried out in Canada.”

In complete, Tavares’s deal contains $70.89 million in signing bonus cash and $6.11 million in base wage. The enchantment states bonus cash differs from wage as a result of it is payable no matter whether or not he performs, is traded, despatched to the minors or injured, or there’s a labour dispute.

The declare has not been examined in court docket.

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