Member of the Toronto Maple Leafs under investigation for tax fraud
The Athletic's Dan Robson has just reported that the Toronto Maple Leafs Captain, John Tavares owes the CRA a massive sum of cash. About $8 Million dollars in total. An amount that Tavares disputes.
The CRA and Tavares are in a dispute, as they say he owes the agency $8 Million dollars, while Tavares counters that notion, and says his contract entitles him to save millions in salary disbursements.
From the Articles:
Six years later, as the Leafs' captain enters the final year of that contract, Tavares faces an $8 million tax bill for his homecoming.
Tavares has disputed the Canada Revenue Agency's assessment. It's one of several ongoing cases challenging ways that pro athletes have traditionally navigated higher tax rates north of the border.
The amount in dispute is tied to Tavares's signing bonus, which is $15 Million dollars, which he believes is construed entirely for tax purposes.
Robson expands upon this:
The deal Tavares signed with the Leafs in 2018 was structured so that the majority would be paid as an annual lump-sum bonus, with a smaller portion as salary.
In the first year of his contract, Tavares was given a bonus of $15,250,000 and a base salary of $650,000.
From that bonus, Maple Leafs Sports and Entertainment paid $1.75M to escrow and just over $2M to the Canada Revenue Agency � 15 percent as required by the U.S.-Canada tax treaty. Tavares then received the balance of the signing bonus � roughly $11.4 million.
As a U.S. tax resident in 2018, Tavares paid United States federal tax and New York state tax, a combined 46 percent, on the gross amount of the bonus, less escrow. The foreign tax credit is then applied in the U.S. for the Canadian income tax already paid.
In total, Tavares paid roughly $5.9 million in taxes on that initial bonus.
However, in late 2022, the CRA reassessed Tavares' 2018 tax obligation, saying he owes $6,847,428 in further taxes � plus more than $1.2M in interest. That interest would still accrue if Tavares had not paid the tax bill immediately.
- Dan Robson
The CRA however contradicts Tavares and maintains that even though Tavares filed for taxes in the USA in 2018, he is a Canadian citizen first and foremost.
Tavares's legal representation has said they haven't found any evidence of this claim.
Robson goes on to state what kind of precedence this could have for any athlete who signs a contract in Canada. If this "ironclad" provision is hereby null and void, this could have broad and far-reaching circumstances for other players in the NHL.
Will players be motivated to sign in Canada ever again? Or will they continue to sign in tax-shelter states?
Source: Hockey Feed
The Canada Revenue Agency (CRA) says John Tavares owes more than $8M in tax and interest
| POLL | ||
JUILLET 24 | 47 ANSWERS Member of the Toronto Maple Leafs under investigation for tax fraud Will the fallout from this be bad news for players who have signed in Canada? | ||
| Yes | 26 | 55.3 % |
| No | 21 | 44.7 % |
| List of polls | ||
