One Comment About Taxation – The Taxation of Signing Bonuses For Cross-Border Athletes; The Case of John Tavares and Patrick Marleau

I’m a huge hockey fan. I love the anticipation of a game starting – two centres crouch at the face-off dot. The referee holds the puck at arm’s length, waits half a beat, and drops it. Nobody remembers the face-off itself. What matters is everything that happens after it.

 

This week, a very different kind of face-off happens in a Toronto Tax Court room. After years of battling for the puck, the Tax Court of Canada trial pitting former Maple Leafs captain John Tavares and former Leaf superstar Patrick Marleau against the Canada Revenue Agency (“CRA”) is underway. The case isn’t really a fight about whether professional athletes should pay less tax. It’s about whether the CRA can effectively narrow a negotiated Canada-U.S. treaty provision – and, in doing so, make Canadian professional sports teams less competitive.

 

Here are the quick highlights for anyone who needs to get caught up. When Tavares signed his seven-year, US$77-million contract with the Leafs in 2018, part of that deal was a US$15.25-million signing bonus for that year, paid while he was still a U.S. resident. Tavares says that bonus was an “inducement” to sign, taxable in Canada at a reduced 15-per-cent rate under Article XVI(4) of the Canada-U.S. tax treaty. However, the CRA says it was salary in disguise, fully taxable at Canada’s top marginal rate for any Canadian sourced income. Marleau’s case raises the identical question.

 

Part of the CRA’s argument turns on the fact that Tavares would only have kept a pro-rated share of the “inducement”, and repaid the rest, had he retired early or stopped playing before the contract ran its course. In the CRA’s view, that obligation makes the payment disguised salary. To me, that gets the logic backward: a repayment clause tied to future performance allocates risk, protecting the team if the player doesn’t deliver the career the bonus was paid to secure – a feature of an inducement, not evidence it was never one. Signing bonuses aren’t used exclusively for tax reasons, either: they’re a standard tool for protecting a player against a labour stoppage or other disruption under the collective bargaining agreement, since a player still collects the bonus even if the league doesn’t play.

 

Some people seem to think that the 15% tax rate that Canada is limited to is the end of the story. In other words, Tavares and Marleau only paid that low rate on their signing bonus and thus they took advantage of that “loophole”. False. That’s simply Canada’s treaty-limited share of the tax. Both Tavares and Marleau were U.S. residents at the time and thus paid full taxation on those amounts. Accordingly, the treaty provision is simply an agreement between Canada and the U.S. as to how much tax each country is entitled to. If Tavares and Marleau lose, they will most certainly seek relief from the U.S. – after all appeals are exhausted – so as to avoid double taxation.

 

Over two weeks, the court is expected to hear from Tavares and Marleau directly. In addition, Brandon Pridham, the Leafs’ former assistant general manager and architect of the team’s salary-cap strategy through the Tavares era; Mike Babcock, the Leafs’ head coach when Tavares signed; Patrick Brisson of CAA Hockey, Tavares’ longtime agent; and Robert DeGregory, associate counsel for the NHL Players’ Association will appear. Obviously, this lineup of witnesses will try to establish how signing bonuses are actually negotiated and understood across the league, and to rebut the CRA’s “it’s really just salary” theory.

 

As discussed above, that single word – inducement – is doing a lot of heavy lifting, and it’s why this case matters beyond two hockey players’ bank accounts. Article XVI(4) is reciprocal: a Canadian-resident athlete signing with a U.S. team gets the same 15-per-cent treatment a U.S.-resident athlete gets signing here. But Canada’s top rates – the fifth highest among the 38 member OECD countries – run higher than the top U.S. rates, so the provision matters more on this side of the border: without it, a U.S.-resident athlete signing with a Canadian team could face Canadian tax on that bonus north of 50 per cent, with only partial relief through foreign tax credits on their U.S. return. Strip the treatment away and Canadian teams are worse positioned every time a free agent weighs where to sign – not because the treaty favours Canada, but because Canada’s own excessive rates make its protection matter more here.

 

The CRA’s position, if it succeeds, doesn’t just cost Tavares and Marleau money. It risks substantially narrowing the practical application of Article XVI(4) for the group it was written to protect: athletes and entertainers with mobile careers who move across the border on a signing bonus. Watching the CRA litigate that away is particularly galling and aggressive.

 

Given all of the above, these cases are a referendum on professional sports in Canada. If the CRA wins, every Canadian NHL, NBA, and MLB franchise loses a meaningful tool for competing against American teams for the same pool of talent – especially given our cold weather environment and non-competitive high-tax rates.

 

For some, the instinctive reaction is that these are millionaire athletes, hard to muster sympathy for. I understand the impulse, but it’s shallow. The main issue is whether the CRA gets to unilaterally narrow a negotiated treaty provision by simply asserting, after the fact, that a category of payment doesn’t mean what it says. And by doing so, it can materially and negatively impact the growth of Canadian professional sports franchises.

 

Back to the face-off dot for a second. Winning the draw doesn’t win the game – it just starts the shift. After years of watching from the bench, we finally get to see whether the CRA’s theory holds up when it has to be proven, witness by witness, in front of a judge – rather than simply asserted by way of reassessments.

 

The puck is down.

 

One Comment About Leadership – Leaders, Don’t Be Afraid to Be Human But Seek Peer Advice

 

Leaders carry a big load, and it’s rarely recognized by teammates. When things go sideways, the blame often lands on the leader. Sometimes that’s fair. More often, it isn’t – because the team doesn’t have the full picture, and they can’t fully empathize with the daily grind of leading.

 

As I’ve written many times before, effective leadership can be lonely and difficult. My advice – based on direct experience – is to seek out peers who are wrestling with similar struggles. Their stresses and experiences will look different from yours, but they can still serve as parallels and often point toward a path to resolution.

 

Peer groups have been a genuine life-changer for me. The Strategic Coach, in particular, gives me exactly that kind of support.

 

It’s ok to admit that leadership is lonely and difficult – whether you’re leading at home, in your community, your business, your volunteer work, or your church. But admitting it is only half the job. The other half is leaning on like-minded leaders who’ve been there and can actually empathize.

 

Do it. You won’t regret it.

 

One Comment About Economics / Politics  – Ottawa’s EV Mandate Repeal — And What Its Own Math Leaves Out

 

The federal government has moved to repeal the Electric Vehicle Availability Standard (EVAS) – the regulation requiring escalating percentages of new vehicle sales to be zero-emission (20% for model year 2026, rising to 60% by 2030 and 100% by 2035). The Regulatory Impact Analysis Statement, published in Canada Gazette Part I on August 15, 2026, confirms the quotas are gone in full. It’s a proposed regulation with a 75-day comment period, not yet final law – but the direction was locked in on February 5, 2026 when Prime Minister Carney announced Canada’s Automotive Strategy, and this filing is Ottawa executing on that commitment.

 

The stated rationale is straightforward: 2025 hit the sector hard – U.S. tariffs on Canadian vehicles and inputs, the collapse of U.S. federal EV support, and the U.S. Environmental Protection Agency rescinding its own endangerment finding, which blew up the cross-border regulatory alignment EVAS depended on. Consumer demand followed suit – zero emission vehicle sales fell from 14% of new vehicle purchases in 2024 to 9% in 2025, recovering only partially to 10–12% in early 2026 once new purchase incentives arrived.

 

The Gazette filing comes with a cost-benefit analysis that deserves some push-back and scrutiny. The government’s own analysis puts the net “societal cost” of the repeal at $90.3 billion – even after crediting consumers with $57.6 billion in avoided upfront vehicle and home-charger costs. These are offset, the RIAS says, by $53.8 billion in “forgone energy savings” and $94.2 billion in “forgone climate benefits.” Look closer at that first number and it’s not really a fuel-savings figure at all: it’s $59.8 billion of avoided electricity costs netted against $113.6 billion of increased gasoline and diesel spending. In other words, the “savings” being forgone assume EV charging is cheap and clean – an assumption the analysis doesn’t actually interrogate on the emissions side.

 

That matters, because the RIAS admits, in its own “Analytical limitations” section, that it doesn’t even bother running a life-cycle model for this analysis – a curious omission for a document trying to justify a $90-billion cost to society. Roughly 15–18% of Canada’s electricity comes from natural gas (Canada Energy Regulator), more in Alberta and Saskatchewan than in hydro-heavy Quebec or B.C. And when the RIAS does venture a qualitative answer elsewhere on the upstream question, it undercuts its own headline number: it cites a well-to-wheel study showing EVs and plug-in hybrids still deliver real emissions reductions even on dirtier grids, then concedes that a fuller accounting would produce more forgone emission reduction from the repeal, not less. So even the government’s own citations suggest the $94.2-billion climate-benefit figure is too low, and the real cost of this decision is higher than the $90.3 billion Ottawa is willing to put its name to. They didn’t just publish a bad number – they published a number their own sources say is understated and repealed anyway.

 

The real story here isn’t the modelling – it’s that the government published a $90-billion “net cost to society” – by their own logic, a floor, not a ceiling – and moved ahead anyway. That’s not a technical decision; it’s a political one, and the RIAS all but says so: repeal is framed as necessary because of tariff shock and “significant economic uncertainty,” not because the underlying cost-benefit case supports it. Stripped of the diplomatic language, the message to voters is: yes, this costs the country money by our own accounting – probably more than we’ve said – but we’re doing it anyway because of the Americans – yes, the Americans are “bad” again – elbows up, eh?

 

In other words, the government’s own document shows the numbers didn’t win the argument – the politics did.

 

But make no mistake: I agree that the EV mandate was ridiculous to begin with and agree with its repeal.

 

Bonus Comment – From William Shakespeare(opens in new tab) – 16^th Century English Poet and Dramatist – About The Burdens of Being a Leader

 

“Uneasy lies the head that wears a crown.”

 

True! This quote is from his famous play – Henry IV (Part 2, Act 3, Scene 1), as King Henry laments about his insomnia and the burdens of kingship. But you know what to do about it – yep, join a peer group!

 

I hope today’s newsletter has been thought-provoking for you.

 

As many of you know, I’m passionate about helping people make better decisions – whether in tax, leadership, or business. If you’d like to go deeper on those topics, my recently released book, Making Life Less Taxing Version Two(opens in new tab) is now available and expands on many of the practical ideas I’ve written about over the years.

 

I’m also putting the finishing touches on my next book, Leadership Compounds: How Small Decisions Build Culture, Credibility, and Legacy. It explores a simple but powerful idea: leadership isn’t about grand gestures – it’s about the small, consistent decisions that compound over time.

 

For those interested in a more hands-on approach, I’ll soon be announcing a bespoke consulting initiative – The Acorn Growth Program – designed to help leaders and organizations grow intentionally, one small (but important) decision at a time. Feel free to reach out to me directly for more information.

 

And if you’re not already on my mailing list, feel free to sign up for my In the Mood Network(opens in new tab) newsletters to receive more content. No fluff – just practical insights on tax, leadership, and economic policy.

 

Thanks for reading. As always, I welcome your thoughts and feedback.

 

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