Moore
September 2021 Newsletter

NHL team manager’s salary continuation taxed only on his days in Canada

Former Toronto Maple Leafs general manager Dave Nonis recently won a Tax Court appeal on an interesting issue.

Nonis was a non-resident of Canada for tax purposes while working for the Leafs, as under the Canada-US tax treaty his ties to the US were closer than to Canada. The Leafs fired Nonis in April 2015. Under his contract terms, the team paid him his salary for the next 12 months. However, he spent only 37 days in Canada in 2015 after being fired, and none in 2016.

For Canadian tax purposes, Nonis reported only 37/365ths of his income from the Leafs in 2015 after being fired, and none in 2016. After all, he wasn’t in Canada any more.

The CRA disagreed, and assessed Nonis on the basis that a specific technical rule in the Income Tax Act required him to pay Canadian tax on all his income from the Leafs.

Nonis appealed to the Tax Court of Canada. In a decision on April 2021, the Tax Court judge ruled in Nonis’s favour. He concluded that the salary continuation Nonis received under his contract was not like a “signing bonus”. Indeed, it would be “absurd” for Nonis to have to pay Canadian tax on the income while he was no longer in Canada.

As a result, Nonis’s appeal was allowed.

Last modified on September 10, 2021 12:00 am
Subscribe to the monthly newsletter