When John Tavares inked a deal with his beloved Toronto Maple Leafs, it was a dream come true. The contract, at the time, marked the richest in Maple Leafs franchise history, laden with hefty signing bonuses.
However, those very signing bonuses have landed Tavares in hot water with the Canadian revenue agency. Today, news emerged that Tavares is embroiled in a legal dispute over an $8 million tax bill imposed by the Canadian government. The disagreement revolves around a signing bonus exceeding $15 million received by Tavares.
Tavares' legal team has lodged a dispute, asserting that the 15% tax rate is accurate, while the CRA insists on a 38% levy. As of now, the CRA has yet to respond to Tavares' legal team, leaving the matter unresolved.
With the salary cap in effect, Toronto has leveraged sizable signing bonuses to navigate challenges. However, this ruling could hamper the team's ability to lure certain free agents if players are subject to the 40% tax rate on signing bonuses, eroding Toronto's competitive advantage.
