Point and Karlsson both say no

But Kucherov, Hedman, Stamkos say yes

Karlsson probably won't even field offers below Doughty money ($11 mil/7yrs). And Point probably won't settle for less than Marner money, just saying.

No chance Point receive more than Kucherov.
And Kucherov receive money after Bridge deal.
Karlsson. Hedman+ taxes+ contender= discount.

I get where you're coming from, but Point and his agent will want Marner money and they will fight tooth and nail for it. But they might settle for $9mil to stay on the team, who knows, Yzerman isn't there to negotiate for you guys any more.

As for Karlsson, he is going to get at least Doughty money, as I said, from another team. And tax breaks don't really matter anymore, look at Tavares and Matthews. Teams and Players agree on bonus heavy, front loaded contracts because a player can get his bonus money paid out to a corporation instead of as wages. So what players do is open a business under there name and get their bonuses paid to said business e.g. John Tavares Inc is where JT gets his bonuses paid to at a tax rate of less than 15%. So why would Karlsson ever take a discount when he can just do that to get around the taxes.

Perfectly said. Nobody considers the tax benefit & cup contender factors.

I think Karlsson takes 7.875m, exact same as Hedman. Why? They're both 28, both Norris winners (EK65's extra Norris title doesn't put him ahead of Hedman since Heddy holds the most recent Norris), both are Swede's, they're really good friends (+ Stammer, Kuch & others). They respect each other & each others skill level. Equal pay mentally supports them both. Meaning if one of them gets paid more, both players couldn't help but think that one with the higher salary is the better player. Equal cap hits maximize self confidence for both players.

Two 28 yr old top pairing, Norris winning, Swedish dmen, one LHD & one RHD, taking identical cap hits that expire the same year? Sounds like a realistic scenario to me.

We don't need Yzerman to keep the team friendly deals flowing. Disagree with Point & Karlsson demanding that much, it depends on where they sign & if they prefer a possible extra mil, or playing for a contender. I'm still waiting for explanation on the multiple contradictions with that "Canadian loophole claim", it may very well exist but the logic of that 1 Canadian article doesn't hold up, & neither do the NHL's top cap hits (they're all high tax rate teams). Why didn't Stamkos get more than Kopitar? Why didn't Hedman get more than Subban?

What do you mean it doesn't hold up? And you honestly think Karlsson won't want more than Doughty? And Stammer and Hedman took less because Yzerman is a great salesman, and was able to sell team success over personal gain to them.

You do know that Karlsson is already on record saying that he wont sign for a discount, He at least wants the Doughty deal which is 7 x 11 for any team not named San Jose. Just because of Florida taxes doesn't mean he'll sign for less. It's been widely reported that he wants to be one of the highest paid players in the league. Hence he's seeking closer to McDavid money then Kucherov money.

Yes I honestly think Karlsson is searching for a cup contender where he'd enjoy playing, before he looks for a possible extra mil elsewhere. It wasn't just Yzerman... Location, cup contenders, low tax rate were all factors.

Answer these questions for me regarding this "tax treaty loophole claim". BTW, the quotes in my questions are from the article.

1. Why does the article use his first-year salary of 15.9m rather than his 11.634m cap hit? (makes "running some quick numbers" very confusing)

2. Why does the article LIE about the percent of games Matthews plays in Canada?? "(A quick glance at the team's schedule tell us this amounts to approximately 73 per cent of players' salaries.)"
I counted myself and the Leafs play 33 times in the U.S. this season. 59.7%. NOT 73%... They plug in 73% for all their "numbers" examples, which immediately is incorrect info and makes me want to stop reading any further into this sketchy article... But I continued reading and continued to find more BS.

3. "Why is residency important? Sticking with the Maple Leafs example, players who are residents of either Canada or the United States are taxed on their entire salary in their home country."
If this is so, what about players that are residents in Sweden, Finland, Russia, or other foreign countries? How do those players get taxed?

4. "Those who are considered residents of the U.S. must also pay tax in Canada – but only to the extent of time on Canadian soil."
Matthews is an example, "he plays 73% of his games in Canada" (which is a LIE, he plays 59.7% in CA). How is he getting taxed less if he plays majority of games in the highest tax rate region?

5. "A signing bonus is defined as a sum of money paid to an employee as an enticement or incentive to join a particular organization or sign a new contract."
If that's so, how is his signing bonus BUILT INTO his cap hit? 93.7& of his $58,170,000 is in signing bonuses... That's not an incentive, that's receiving your cap hit in other methods than base salary. If the quote is legit, signing bonuses would be in addition of the cap hit... Ex: getting a 1m signing bonus in addition to a 5m cap hit contract (6m total), would be incentive to pick that deal over a 5m cap hit w/o 1m bonus.

6. "The treaty provides that a signing bonus paid by a Canadian NHL team to a U.S.-resident player would be taxable in Canada – but that tax may not exceed 15 per cent of the gross amount of the payment."
Who ends up paying the taxes that Matthews avoided? The Canadian Government? Taxes don't just "disappear".

7. "Assuming the player's U.S. tax rate exceeds 15 per cent (it does, remember the 37-50 per cent), the bonus would effectively be taxable at a combined rate equal to his normal U.S. rates. And so, there is no Canadian tax cost disadvantage on the signing bonus amount."
Wtf is a "combined rate equal to his normal U.S. rates"? What are we combining? The bonus rate (15%)? If that's the case, how can you combine that rate with the normal U.S. rates (37-51%) and expect to get the same normal U.S. rate? If you combine the rates, you'd get a 51-66% U.S. tax rate. Which IS NOT "equal to his normal U.S. rates".

8. Since all the "numbers examples" that the article uses are falsely skewed... Let me make my own example with REAL analytics, that maintains the same "tax treaty claim" rules...

Matthews cap hit is 11.634m (fact). If 93.7% of his salary is paid via "signing bonus" (10.9m), and he gets taxed 15% in CA (plays 49 games in CA), then 6.5m gets taxed in CA over this season (15% = 975k).
Since the article is unclear regarding "the bonus would effectively be taxable at a combined rate equal to his normal U.S. rates" (LOL wut), I'll assume they mean that U.S. tax rates stay the same.
In this case, since 6.5m got taxed in his 49 CA games, that leaves 4.4m to be taxed in his 33 U.S. games. Based on the tax rates of where his 33 U.S. games take place @, the average tax rate is 43.31% (43.31% = 1.905m). Add that to the 975k and you get 2.88m.

Now for the base salary (735k). We know this number is getting taxed @ the real NHL tax rates. Since 41 games are in Toronto (53.09%) & 33 in the U.S (43.31%), the remaining 8 CA games tax rates avg is 50.87%. Altogether, the average of those 3 tax rates (with the 41/33/8 factor included) is 48.94% (48.94% = 360k). Add the 360k to the 2.88m.

So, according to my math Matthew's would pay roughly 3.24m in taxes AAV, and he'd pocket 8.394m in post-tax earnings. This is better than the 5.444m (post tax earnings) that the tax calculator shows, & it's also better than Tampa's post tax earnings (7.364m) when calculating the same 11.634m cap hit.

9. If we do the same math for his 15.9m first-year salary, 15.91m x .597 (CA game rate) x .15 (signing bonus tax %) = 1.425m in CA taxes paid.
Now U.S. taxes:....................................................................... 15.91m x .403 (US game rate) x .4331 (US tax % avg) = 2.777m in U.S. taxes paid.
Now 700k base salary taxes:................................................. 700k x .4894 (avg tax rate) = 343k
Add those up and you get 4.545m paid in taxes his first year... Not 2.5m like the article claims...

SOOOO bottom line is this: Clearly the math was completely incorrect from the article. But regardless, after doing my own math... The "tax treaty claim" does indeed leave Matthews with less taxes paid than the tax calculators will show... But my first 7 questions are legit and need answers in order for this whole "claim" to even be possible.

Evidence for this claim being true:
My own personal math example (if it correctly follows the rules of the treaty), does show less taxes being paid by Matthews.

Evidence for this claim being BS:
There is only 1 article I can find that talks about this.
That 1 article is full of contradictions.
The article is Canadian (biased).
The highest paid NHL players are on high tax rate teams... Coincidence?
At most, maybe 10% of people on Capfriendly have mentioned this claim. Why aren't more people aware?
Nobody in that 10% has been able to answer the questions I linked to the article.
etc................

LAST QUESTION: If this is true, what would stop U.S. teams from doing the same thing & start paying their players 90%+ in signing bonuses also? U.S. teams should be able to benefit even more than the article is suggesting CA teams are benefiting.

First of all, I really appreciate the dedication and research you did on this subject. It is nice to see that there are still people out there who would rather do the research themselves then let others tell them what is right and wrong.

Secondly, I will try and answer your points one by one, but some I will combine into one answer, just so you know.

1. What article are you referencing, as I would very much like to read it. From what I can gather from your what you are saying, this article seems to either be written by someone who never took math in high school, or by someone who writes for the Maple Leafs, which would make the first point also true.

2. I cannot speak for the article as I neither wrote it nor have I read it.

3-4. Players in the NHL get taxed in Canada for the games played in Canada and taxed in the US for games played in the US, regardless of nationality or residency. If this article is specifying anything different, then it should be discredited right away, as it is wrong.

5-8. So signing bonuses are different in the NHL. The NHL and NHLPA define a signing bonus as a portion of a players yearly salary that is to be paid out in a lump sum on July 1st of the playing year. It is more like an advance on salary rather than a signing bonus as stated. So for Tavares, his salary for the 2019-20 season is $15.9 million, but he receives his almost $15 million dollars of it on July 1st as a "signing bonus". The other $900,000 and change he gets as his salary throughout the remainder of the season. Signing bonuses in the NHL, and not just Canada from what I understand, can be paid to any organization that the players deems as well, not just themselves, as I said before. So players like Matthews, and Tavares have Incorporated either their names or a business that they then get their signing bonuses paid to, at a much lower tax rate than if they had it paid as personal income tax. This also eliminates the ability for the US to tax it as it was paid to a Canadian business, and not the player personally, as the US can only tax that players personal income made in other countries, and vice versa for players who play in the US and live in Canada. Essentially, when a player defers their signing bonus to a business, it falls under the small business tax code and not the personal income tax code, at least here in Canada.

Also, I have no clue what the combined tax rate they are talking about is.

9. Your math is correct and you have seem to have proven that article as grossly misleading. Just from what you have written here, I am excited to hopefully read this poorly written and researched article you have found. Also, US teams do offer signing bonus incentives, as many players have signing bonuses built into their contracts. It just seems like the amount is limited by the individual state's tax laws. I am going to do more research into that though.

Thanks for the thorough reply, it honestly made my day to read such a well researched and thought out observation on this subject.

Exactly, Karlsson wants to get f*cking paid!

LOL I can't believe I forgot to add the link, my apologies. http://www.mondaq.com/canada/x/779510/tax+authorities/Auston+Matthews+Shoots+And+Scores+Tax+Savings

I appreciate your intelligent & respectful response. I wasn't sure I was going to get one with the length of my comment lol. I love researching analytics so it was easy for me to sniff out some flaws lol. I'm bout to go to the Lightning vs Jets game so I'll hyu with a more in depth response later tonight.

@tesau315 False alert, sister ended up sliding to tonight's game

But I mean I pretty much agree with everything you said.

As for the signing bonus discussion, isn't the treaty claiming that signing bonuses get taxed 15% in CA but have normal tax rates when in U.S. , regardless if the bonus is tied to a business or not?

I look forward to reading your updated response after reading the article (again, my bad for forgetting to link it originally)

That article has does a piss-poor job of explaining the situation. Like you posted above, the math is grievously wrong and it just shows how little they actually researched Matthews situation. They do admit that they just took a "quick glance", but if you are writing an article, you should at least do your due diligence and research the topic before hand.

Now back to the signing bonus discussion, the US-Canada tax treaty is only for personal income earned in either country, not for business income. So if Matthews took his respective signing bonus as personal income, then yes, he would pay the 15% in Canada and his respective taxes in the US.

So if he tied his income to a business, is it saying he would only pay 15% in CA and be completely exempt from all other taxes? It sounds like there's 3 tax categories: Federal, State, & Jock. Are all 3 effected in the treaty?

https://afptax.com/blog/nhl-draft-2018/

"At the other end of the tax spectrum are the two selections that will play in Canada. Jesperi Kotkaniemi, selected by Montreal with the third overall pick is the least lucky of the five picks as he pays not only Canadian and provincial tax, but will also be subjected to US state and city tax as well. Brady Tkachuk selected with the fourth overall selection by Ottawa will net $191,739.15 or 12.61% less over his three-year entry level contract than the selection right after him Barrett Hayton who was drafted by Arizona."

https://www.bna.com/nhl-players-salaries-n73014470580/
https://oilersnation.com/2018/07/10/comparing-nhl-player-contracts-based-on-city/
chrome-extension://cbnaodkpfinfiipjblikofhlhlcickei/src/pdfviewer/web/viewer.html?file=https://www.taxpayer.com/media/CTF-HomeIceDisadvantage.pdf
https://thehockeywriters.com/inevitable-for-vegas-salary-cap-and-taxes/
https://hockey-graphs.com/2019/01/08/how-much-do-nhl-players-really-make-part-2-taxes/

Those are some really good articles that all do a great job of explaining how personal income tax works in the NHL.

Jock tax is also on any income earned while playing in said state, so as a signing bonus is a 1-time payment, it would be exempt from Jock taxes.

And yes that is correct. As long as Matthews bonus is used as business income for a Canadian business and not personal income, it would be exempt as it wouldn't be personal income. So, Matthews would pay 15% federal corporate tax rate and a 11.5% provincial corporate tax rate, on his bonus instead of the 15% Canadian tax rate (from the US/Canada tax treaty section on signing bonuses) plus his personal Fed/State taxes, if he took it as personal income. So he pays 26.5% taxes in Canada only, instead of 15% in Canada and the 43.6% tax he would pay in the US (Federal+State). That only applies to his bonus though.

His normal wages are still subject to all US Fed/State/Jock taxes, but cannot be taxed in Canada, according to the tax treaty, since he is a US resident. I thought players still paid individual income tax to each state/province they played in. So I was wrong when I mentioned that before. I learned something new today.

Right, aside from the teams that don't abide by the tax treaty.

But overall I'm still confused, does this mean that gavin tax calculator is the accurate post tax earnings?

Yes, and it is accurate, but because signing bonuses seemingly get taxed differently depending on where you sign and what options are available to the player, it is easier to assume the player just takes it all as personal income.