While there isn't much they can do, the NHL and NHLPA bosses are keeping an eye on Tavares' battle in tax court.
MUNICH — The Canada Revenue Agency’s multi-year pursuit of John Tavares’ tax treatment of his 2018 signing bonus with the Toronto Maple Leafs is on the radar of both the NHL and NHL Players’ Association.
Tavares took the stand earlier this week in Tax Court of Canada in Toronto, testifying about the negotiations that brought him home from the New York Islanders on a seven-year, US$77-million contract. At the heart of the dispute is a US$15.25-million signing bonus paid while he was still a U.S. resident. Tavares and his legal team argue the payment qualified as an inducement under the Canada-U.S. tax treaty and was properly taxed at the preferential 15 per cent rate. The CRA reassessed his 2018 filing in 2022, characterizing the money as employment income fully taxable at Canadian rates and seeking roughly $6.85 million in tax plus $1.2 million in interest, a total near $8 million.
Speaking Friday at the NHL’s European Media Tour in Munich, deputy commissioner Bill Daly confirmed the league is tracking the matter closely.
“We have to be cognizant of all issues that impact players to that extent,” NHL Deputy Commissioner Bill Daly told The Hockey News during the league’s annual European media tour. “We have our own issues with Revenue Canada on some of their interpretations of the tax laws with our clubs. So it’s obviously something we’re interested in and we’re following.”
Former Maple Leafs teammate Patrick Marleau has also appeared as a witness in the proceedings. Marleau is simultaneously fighting his own similar CRA reassessment tied to the large signing bonuses structured into his three-year deal with Toronto in 2017. Both cases turn on whether those upfront payments were genuine inducements designed to attract free agents north of the border or simply salary in disguise.
The player’s union, led by Executive Director Marty Walsh, is also keeping watch of the situation, knowing that any situation that affects a player’s bottom line becomes a concern, whether it be a reassessment here, on in other cases, tax imposed on its players beyond league control.
NHLPA executive director Marty Walsh struck a similar note, framing the Tavares situation as part of a broader pattern the union monitors for its members.
“We have a new arena coming in potentially in Plano, Texas, one of the funding mechanisms is to charge a fee to our players. I’m absolutely 100 per cent against that,” Walsh told The Hockey News., “Our players shouldn’t be paying for an arena, a brand new arena they’re going to play in. So we monitor those different situations around the country, whether it’s a charge on our players or a tax on our players or something that John’s fighting for in Canada. We want to try to be helpful where we can.”
Walsh also noted that there isn’t much they can do beyond the support when it comes to the government. Something the Boston mayor can attest to.
“It’s beyond hockey, but it’s also beyond initial control,” Walsh said. “It’s not a collective bargaining issue.”It’s a government regulation, a government law, however they do it. So certainly we want to (be helpful in) those situations.”
Tavares has maintained publicly that he has no regrets about the decision to sign in Toronto, emphasizing that the choice was driven by family, values and the opportunity to play for his hometown team rather than pure dollars. Still, the financial stakes are significant, and the outcome could influence how Canadian clubs structure future free-agent offers aimed at U.S.-based talent.
Signing bonuses have long served as a practical tool for teams operating under Canada’s higher top marginal tax rates. By front-loading money while a player is still a non-resident, clubs have historically been able to leverage the treaty’s lower rate on inducements. The CRA’s push to reclassify those payments as ordinary employment income challenges that model. If the agency prevails, the competitive disadvantage already faced by Canadian franchises in free agency could widen further.
The case is not expected to deliver an immediate ruling. Justice J. Scott Bodie has been hearing testimony this week, including from Tavares on the precise sequence of meetings and phone calls with then-Maple Leafs general manager Kyle Dubas in the summer of 2018. Marleau’s appearance as a witness has added another layer, offering the court a contemporaneous account of how Toronto used signing-bonus structures to make its offers more competitive against U.S. destinations.
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