Description: John Tavares, captain of the Toronto Maple Leafs, is suing the Canada Revenue Agency in an $8 million dispute regarding a reassessment of his 2018 income tax return. The essence of the dispute relates to the taxation rate on his $15.25 million signing bonus. Tavares and his advisors believe the bonus should be taxed at a lower rate of 15%, arguing that it falls under the inducements clause for artists, musicians, and athletes detailed in the Canada-US Tax Treaty. The CRA, for its part, is demanding $6.8 million in taxes and an additional $1.2 million in interest.
Date: February 7, 2024
Source: bnnbloomberg.ca
Discussion points:
1) How do you feel about special tax-treaty provisions for athletes, artists, actors, and musicians?
2) Do you have interest in a career as a tax advisor?
3) Page 3-4 of Wiley’s Financial Accounting: Tools for Business Decision-Making speaks to the subject of NHL signing bonuses. What are the key factors to consider as to when the bonus would result in an accounting transaction?
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