Major Development in John Tavares' Tax Battle with CRA as Star Nears Free Agency
Photo credit: Sam Navarro-Imagn Images
John Tavares has been embroiled in a tax situation with the CRA, and as free agency looms, a new breakthrough in the case has been revealed.
One of the more intriguing stories over the past bit has been the CRA's hunt for John Tavares' apparent unpaid taxes on his signing bonus when he signed his mega deal with Toronto in 2018.
The agency is looking for a repayment due to the fact they believe that Tavares' bonus was technically not an incentive to sign, therefore needs to be taxed fully, while Tavares' camp argues he should be looked at different.
CRA must provide how they are auditing John Tavares
But in a stunning bit of news, the CRA has been ordered to hand over their documentation with regards to how they are taxing Tavares, as well as answer previously refused questions.
David Alter of The Hockey News had a bit more information on the logistics of the case:
In the recent hearing, Tavares' lawyers challenged the CRA's refusal to provide answers and documents related to three key areas.
These included files from the CRA auditor and audit team leader, communications with other CRA departments involved in the reassessment, and information about the tax treatment of other American NHL players who received similar bonuses.
These included files from the CRA auditor and audit team leader, communications with other CRA departments involved in the reassessment, and information about the tax treatment of other American NHL players who received similar bonuses.
Other former Maple Leafs like Patrick Marleau and Jake Muzzin had to fight the CRA as well, and the CRA seems to be heavy in the pockets of any player who decides to sign, as even MLB's Josh Donaldson and Russell Martin both felt the pressure.
What this means for Toronto's future
If the CRA is found that they acted in bad faith towards reassessing Tavares tax situation, it could set a precedent and open the doors to a ton of free agents to come over to a Canadian market.
As Alter writes:
Judge Yuan rejected many of the CRA's objections, which had included claims that the requests invaded the internal "mental process" of CRA officials or breached taxpayer confidentiality.
Instead, the court found that several questions were relevant to assessing whether Tavares was treated fairly and whether the CRA's conclusions were consistent with past cases.
The judge placed limits on some disclosures, particularly where third-party confidentiality could be compromised, but ultimately ruled that key aspects of the CRA's audit files must be shared with the appellant.
Instead, the court found that several questions were relevant to assessing whether Tavares was treated fairly and whether the CRA's conclusions were consistent with past cases.
The judge placed limits on some disclosures, particularly where third-party confidentiality could be compromised, but ultimately ruled that key aspects of the CRA's audit files must be shared with the appellant.
Often times, signing bonuses are added to add more salary to a deal without increasing the AAV, and if the CRA is unable to get their hands on any of the money they feel entitled to, or at least be more transparent, it could bring a wave of change for all pro sports in Canada.
A lot of the talk about signing in Toronto is due to the high Ontario taxes, but beyond that, it's the CRA looming eerily behind just waiting for the chance to take, so if you take them out, it's one less huge caveat when it comes to negotiations; especially crucial now with this year and next year's free agent class.
| POLL | ||
JUIN 15 | 434 ANSWERS Major Development in John Tavares' Tax Battle with CRA as Star Nears Free Agency Will the CRA drop their case against John Tavares? | ||
| Yes | 286 | 65.9 % |
| No | 148 | 34.1 % |
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