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John Tavares owes $8M to the Canada Revenue Agency (and he’s contesting it)
Credit: Capture d'écran / Screenshot
In 2018, John Tavares chose to sign with the Toronto Maple Leafs. One of the reasons he chose Toronto was to be at home, having grown up as a Leafs fan.

But being at home also meant accepting to play in Canada, a place where taxes are a factor.

Had he chosen to sign in Tampa Bay or Dallas, two places where the tax rate is lower than in Canada, he would have had a different reality. But here, in Toronto, he plays by Canadian rules.

And obviously, he doesn’t agree with everything that’s imposed on him.

According to Glen McGregor of the National Post, the Maple Leafs captain disagrees with the fact that he owes $8 million to the Canada Revenue Agency in connection with his 2018 signing bonus.

What you need to know is that Tavares’ contract is mainly built around the fact that he’s paid in signing bonuses. In 2018, he had a bonus of around $15.3m.

Every year, he gets a big chunk of money, but over the course of the hockey season, he earns less than $1 million.

(Credit: Cap Friendly)
The difference between 2018 and other years? In the first half of 2018, he was playing in the United States, in New York. So he says his bonus, under a Canada-U.S. tax treaty, should be taxed at 15%.

He says his bonus falls into the treaty’s “incentive” category. He also says he spent only 45 days in Canada between September and December 2018, following the signing of his contract.

The Canada Revenue Agency, for its part, claims instead that the tax rate should be around 38%. This is why the amount claimed is so high.

The $8 million includes not only the amount, but also the interest for the last few years.

The player also claims that the $15.3 million bonus was very important in the decision to lure him to the Maple Leafs. He also says he cashed it in his New York bank account.

Obviously, this is an issue not only for the Maple Leafs, but also for other Canadian teams. After all, every time something like this happens, it sets a precedent for what’s to come.

It’s only natural.

It’s hard enough to attract players to Canada, but imagine if this kind of difficulty were added to the mix. After all, big signing bonuses are becoming increasingly common.

While we’re on the subject, let’s not forget that Georges Laraque was once sued by Revenu Québec over his taxes. He claimed that he could pay them in Alberta even though he played for the Habs, since he lived there and his children lived there.

He won the case.

In bursts

– Well done.

– Things have been going well for Slaf for the past month and a half.

– Torts’ class.

– Nick Bonino refuses to go to the AHL. [JdeM]

– Versatility is important.

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