As the Toronto Maple Leafs and forward John Tavares work on signing a new contract to keep him in Toronto, he might have preserved a few extra million through the courts. In a battle that seems to have dragged on forever, his lengthy tax appeal fight against the Canada Revenue Agency has been adjourned and will likely remain dormant in his favor according to The Hockey News.
When Tavares signed his massive seven-year, $77-million free-agent deal with the Maple Leafs in the summer of 2018, it carried a $15.25-million US signing bonus. This is where the dispute from the CRA begins. The CRA contended that the bonus should be treated as salary and taxed at 50%, close to $8 million in Canadian dollars. Tavares’s representatives countered the claim, by stating that it qualifies for a preferential 15% rate under the Canada-U.S. Tax Treaty, a deal covering income earned by non-residents providing services in Canada.
The case was being watched closely by all of Canada’s pro sports teams. With hopes of luring more stars north of the border to the seven NHL franchises, as well as the Toronto Blue Jays and Toronto Raptors. MLSE is fortunate enough to have the luxury of handing out such lucrative signing bonuses to land star players. However, if the CRA ended up winning this case, signing top stars would've become much harder for MLSE and other Canadian sports franchises.
This isn't the first time the CRA has gone after Toronto sports stars. They were unsuccessful in similar proceedings against the contracts of former Toronto Blue Jays stars Josh Donaldson and Russell Martin. However, the CRA is appealing their losses in those proceedings. There's no word on if the CRA will also appeal the courts' adjournment in the Tavares case. For now, Tavares has won and can look forward to moving on after his eight-year battle with the CRA.
Toronto Maple Leafs Hope to Re-Sign John Tavares
With his business against the CRA out of the way, at least for now, Tavares can focus on negotiating a new contract with the Maple Leafs. A new deal is expected to be in the 3–4-year range with him making between $5-6 million a season.
Tavares registered 38 goals and 36 assists for 74 points in 78 games last season. From a points perspective, that makes him one of the top free agents this summer. However, he has expressed numerous times that he wants to remain in Toronto and likely retire here. It shouldn't be too hard for Tavares and the Leafs to find a salary and term that both sides can agree on.
Tavares will be 35 years old when next season starts, so a 3-4-year deal will take him to 38 or 39 by the time it expires if he doesn't retire before it ends. Age might catch up to him in the later part of the deal, but for now, he shows no signs of slowing down.