Could the New Wealthy Tax Increase Affect our Sports Industry?

Sports Industry in Canada after taxes

Whenever there is going to be a tax change one of the first things that most of us do is take a quick look to see if it is going to directly affect us.   If it isn’t then we tend to just forget about it.  We know that with the new Liberal government that there are several changes going to be taking place, with the most talked about being at the tax hike on the high income earners.

For most of us at that don’t fall into the high income brackets we are glad to see that it is not the average tax person that is getting hit once again, and we move on with her thoughts.  What we really need to do however, is take a look to see if this tax increase on the select individuals is going to have an indirect effect on us.

Some have talked about how it may affect the job sector, but others are now looking at it how it could actually affect our sports industry.   There is some worry that star athletes will consider the tax situation before signing on with Canadian teams.

Basically with this new tax hike what it deals with is changing the top marginal federal tax rate to 33% from its current 29%.   This is applicable to income of $200,000 and above tax bracket.

The concern in the sports industry is that every national hockey league team has many players that are fitting in to this tax bracket.   It has been indicated that this tax bracket situation has been lucrative for some teams in enticing their star players to join.   For example, the NHL for the Calgary Flames and the Edmonton Oilers were a more lucrative financial team to join because of their lower provincial tax rates.   However on the other hand, Québec has one of the highest tax jurisdictions when it comes to sports teams and Ontario is catching up in this area quickly.

Ironically it is the tax factors that many of the high sports athletes take a look at when they are signing new contracts.   This along of course with many other factors helps them reach their decision.   While this may apply to some players it doesn’t certainly apply to them all.   The tax rates may play one part of their decision making but certainly is not in most cases the deciding factor.

Basically when it comes down to it rather than deciphering the different industries, when it comes to the high income earners the approach that is being taken is on the money value of $200,000 income and not what the industry is that is generating this type of money for the individuals.


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Sam Seidman, CPA, CA, LPA
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