Reply to "Yankees and DJ LeMahieu finalizing $90 million deal"

@sawyer posted:

Toronto should have offered the moon.  He's a stud.  Rockies were fools for letting him walk.  Of course they traded Nolan, so......

The reason Toronto and other Canadian Sports teams don't attract veteran players is they have to pay them so, so much more than an American Team.  When they go to Canada, they get taxed by our government and the Canadian Government plus most states and province have additional sports taxes on the player.  Here is part of the law:

Non-Resident Athletes Playing for Canadian Teams

Under s.2(3) of Canada’s Income Tax Act,  non-resident individuals can be taxed by the Canada Revenue Agency if that individual has:

• Been employed in Canada;
• Carried on a business in Canada; or
• Disposed of a taxable Canadian property.

This applies to non-resident (e.g. American or other) professional athletes who play for Canadian sports teams, such as Americans, Swedes, Russians, Cubans and other foreign nationals who play for Canadian NHL, NBA, MLB, MLS, or other professional teams (e.g. Maple Leafs, Senators, Oilers, Flames, Canadiens, Jets, Canucks, Raptors, Blue Jays, Toronto FC, Vancouver Whitecaps, and others).

Requirements for Non-Residents Playing for Canadian Teams

All non-residents must pay Canadian tax on any income earned in Canada at the applicable tax rate (see below).

For professional athletes who play on teams who have games in both Canada and the U.S. (this would include most major league sports), this means they pay Canadian taxes only on income earned during games played in Canada.

Professional athletes must therefore file Canadian tax returns are report their:

• Salary;
• Signing bonuses and other bonuses;
• Canadian endorsement deals;
• Investments in Canada;
• Real estate in Canada; and
• Any other income earned in Canada.

In addition to paying tax on this income, Canada does not permit deductions from employment related expenses, which for professional athletes can include things such as agent fees or costs incurred during training (for equipment, mileage, etc.).

Canadian Tax Brackets

In 2018, federal tax brackets in Canada were as follows:

Most professional athletes would fall into the last category above, and thus would be taxed at the highest tax rate.

Other Considerations for Athletes

Professional athletes are in a unique situation. In addition to making income in both Canada and the U.S. (and, in the U.S. in multiple states, all of which charge different levels of “jock tax”), athletes earn significant income at the highest tax rate, but for a finite period of time.

All of these factors come together to create a very specific situation that many other income earners do not have to consider. Strategic wealth management and tax planning becomes incredibly important in order for these athletes to be able to enjoy a steady income for many years, including after their playing days are over.

Anyway, I'm glad he stayed.