Court documents show Tavares filed an appeal through his lawyers last week in the Tax Court of Canada seeking to have the CRA’s reassessment of his 2018 tax return annulled.
Tavares, a 33-year-old from Mississauga, Ont., signed a seven-year, US$77-million contract to join his hometown Maple Leafs on July 1, 2018. He previously played for the New York Islanders from 2009 to 2018.
The contract included a US$15.25-million signing bonus in its first year.
According to court documents, the CRA in its reassessment determined Tavares’s 2018 income was $17.8 million higher than reported and ordered the player to pay $6.8 million in taxes — over 38 per cent of the bonus — plus $1.2 million in interest.
The appeal argues that Tavares’s signing bonus is eligible for the reduced rate of 15 per cent under a Canada-US Tax Treaty provision that sets lower rates for “inducements” paid to artists, musicians, actors and athletes. The claim has not been tested in court.