Description: Well, if you’re arguing against the Canada Revenue Agency (CRA) about your taxes, you are probably feeling pretty good when the judge says that CRA’s position is “absurd.” Dave Nonis, one-time general manager of the Toronto Maple Leafs, found himself in that position. When the Leafs fired Nonis in 2015, he returned to his home in the United States. The Leafs continued to pay him per the terms of his contract for 2015 and 2016. Using a formula developed for taxing sports figures who split residency between Canada and the U.S., Nonis paid taxes in Canada for only 37 days residency in 2015 and 0 in 2016. CRA didn’t like that, maintaining Nonis should have used his 2013-14 residency percentages. That’s what the judge found “absurd.”
Date: April 15, 2021
1) What do you think of the judge’s decision?
2) Why do you think the Income Tax Act may have been changed in 1981 to allow this treatment of income for those involved in professional sports?
3) Maple Leaf Sports and Entertainment, Nonis’s former employer, appears in Problem 1.3B of Wiley’s Financial Accounting: Tools for Business Decision-Making. Tackle this problem in-class and discuss your answers with your classmates.