John Tavares undertaking legal battle with Canadian government

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Liam McCormick
February 7, 2024 (7:23)

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Early this morning, some extremely rare news broke out of Toronto from TSN reporter Rick Westhead. According to Westhead, Tavares is planning to fight the Canadian Revenue Agency, who's claiming Tavares owes over $8M in taxes.

Westhead is referencing an article from the National Post's Glen McGregor, who explains Tavares' legal case. The dispute with the CRA is over Tavares' signing bonus when he joined the team six years ago. Tavares is arguing he should've paid 15% taxes on his signing bonus, while the CRA says it should be 38%.

»The dispute is over the signing bonus Tavares received for joining the team nearly six years ago. Tavares argues the bonus should have been taxed at only 15 per cent under a provision of a Canada-U.S. taxation treaty. The CRA assessed that he must pay a rate of over 38-per-cent on the bonus, plus interest.»

According to Gregor, the outcome of this case will have a significant effect on how Canadian NHL teams are able to sign free agent players. If the CRA and potentially the courts decide that Tavares is owing that significant amount in taxes, it may discourage other players signing bonus-laden deals with Canadian teams.

»The outcome of the case could have a bearing on professional sports franchises looking to offer big signing bonuses to convince unrestricted free agents to play north of the border � a task made harder by the Liberal government's decision to raise the top federal tax rate from 29 per cent to 33 per cent in 2016.»

This will certainly be something to watch in the coming weeks, and will have a massive effect on all hockey stars paid out in salary bonuses on Canadian teams.

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FEVRIER 7 \| 743 ANSWERS John Tavares undertaking legal battle with Canadian government Will this make it harder for Canadian teams to sign players?
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