Former New York Islanders and current Toronto Maple Leafs captain John Tavares has been in hot water with Toronto fans and media during his 10-game goalless streak just before the All-Star break.
The Islanders’ former first-round pick now faces even more serious issues with the Canada Revenue Agency
According to Glen McGregor of the National Post, Tavares is suing the Canada Revenue Agency over charges that he owes more than $8 million in taxes and interest.
The claim is based on Tavares’ signing bonus when he signed a 7-year, $77 million contract in 2018.
John Tavares is suing Canada’s tax office for $8 million, which it believes he owes on his Leafs signing bonus. https://t.co/AP1YthYGdR
— Glen MacGregor(@glen_mcgregor) February 7, 2024.
Tavares’ contract is mainly signing bonus based, with a salary of less than $1 million for each of his seven years with the Leafs.
When Tavares signed with Toronto in 2018, he received a $15.25 million signing bonus for the season. The CRA alleges they improperly estimated the taxes owed on his 2018 signing bonus, claiming he owes $6.8 million in taxes plus $1.2 million in interest.
Tavares and his lawyers believe that a provision in the Canada-United States Treaty allows sportsmen, entertainers, and others to pay only 15% of their income taxes, such as signing bonuses, rather than 38%. They claim the bonus was wired to Tavares’s New York-based bank account and that he only spent 45 days in Canada between the start of training camp and the end of 2018.
Maple Leafs captain John Tavares is contesting the Canada Revenue Agency over a $8 million tax levy.
Tavares claims he should return 15% of the US$15.3 million signing bonus he received when he joined with Toronto in 2018. The CRA states that the bonus should be taxed at 38%.
via @glen_mcgregor.
— Rick Westhead (@rwesthead), February 7, 2024.
“The signing bonus was consideration for Tavares — a uniquely skilled and sought-after unrestricted free agent — committing to the seven-year contract with the Toronto Maple Leafs,” the appeal submitted by Tavares’ lawyers states. The appeal asserts that it was “not salary, wages, or other remuneration in respect of employment.”
Taxes paid by Canadian athletes have long been a source of debate in the hockey community. With states in the United States that do not have state income taxes, such as Florida and Texas, athletes have an incentive to sign with organizations in these areas because they will keep more money in their pockets rather than paying taxes to the government. The outcome of the Tavares situation may have an impact on future free agents who sign with Canadian teams.
