What’s Going On With Tavares’ Taxes and What It Means for the Average Canadian

What’s going on with John Tavares and the CRA?

In 2024, the CRA disputed how Tavares reported a portion of his income on his Canadian taxes. According to media reports, they contested how a large signing bonus Tavares received when joining the Maple Leafs in 2018 was classified and taxed. Tavares’s tax return treated the bonus as a non-taxable capital gain in the U.S., based on where and how it was paid. In Canada, 50% of capital gains are added to income and taxed, usually resulting in a lower tax bill than straight income. The CRA argues that it should have been treated as employment income in Canada, and therefore fully taxable.

Tavares was one of several NHL players that were audited and reassessed. Most of the players have filed objections with the CRA and are making their cases through the courts. The reassessment, if successful, could result in a significant tax bill for the NHL star—millions of dollars, depending on how the case plays out.

While most Canadians aren’t dealing with cross-border tax rules or multi-million-dollar contracts, this case touches on a few key things that matter to all of us. That is where income is earned, how it’s reported, and whether you’ve interpreted tax law correctly.

What it means for you: 5 takeaways

We asked Stefanie Ricchio, CPA and tax expert with TurboTax Canada, to help break down the lessons from the Tavares case for the average Canadian.

1. Where you earn matters

Even though Tavares signed his deal in the U.S., he lives and works in Canada most of the year. That means Canada likely considers him a resident for tax purposes and therefore expects him to report worldwide income.

“If you live in Canada and make money abroad—whether from a freelance gig, online business, or job—you still need to report that income to the CRA,” says Ricchio. “That’s where a lot of people get tripped up, especially with remote work and side hustles.”

2. Classifying income correctly is crucial

It’s not always cut and dry. The CRA and Tavares' legal team seem to disagree on whether the signing bonus should be treated as employment income or a capital gain.

Employment income is fully taxed. Capital gains, on the other hand, are taxed at a lower rate—only 50% of the gain is taxable.

This same rule applies to more everyday situations. For example, if you buy and sell sneakers or concert tickets as a hobby, is that a business or a capital gain? If you tutor on the side or sell art online—is that self-employment or a one-time transaction?

“If it’s something you do regularly or with the intent to make money, the CRA is likely to view it as business income,” says Ricchio. “And that means you need to report it—and possibly register for GST/HST if your earnings go over $30,000.”

3. The CRA can reassess you—years later

The Tavares case is only coming up now, years after the original transaction. That’s because the CRA has the power to reassess your taxes for up to three years—or even longer if they suspect something was intentionally left out.

“Keep your receipts and documentation for at least six years,” Ricchio recommends. “If the CRA asks questions later, you’ll want to be able to show your work.”

4. Cross-border income isn’t just for celebs

Many Canadians today earn money from foreign clients or companies—through freelancing platforms, e-commerce sales, tech gigs, or remote work.“Even if you're paid in U.S. dollars through an online payment platform, you must still report this income,” says Ricchio. “And depending on how it’s structured, you might owe taxes in both countries. That’s where engaging a tax expert, like at TurboTax, can really help.”

5. Tax law isn’t always clear-cut

The Tavares situation shows that even with teams of accountants and lawyers, there’s sometimes disagreement over how income should be treated.

“A lot of people think taxes are black and white, but there’s actually a lot of grey,” says Ricchio. “The key is to be honest, keep good records, and ask for expert help when you’re unsure.”

At the end of the day, John Tavares’ tax dispute may come down to a legal argument about definitions and jurisdictions. But for Canadians navigating a world of gig work, online income, and side hustles, it’s a great reminder to stay informed and be proactive when it comes to your taxes.

Need help with your taxes? TurboTax makes it easy to file with confidence. Use TurboTax Assist and Review to work with a tax expert to set up the goal.

Get Started