Tax Season: Part 3

[vc_row][vc_column][vc_video link=”″ css=”.vc_custom_1643040072497{padding-top: 20px !important;padding-bottom: 20px !important;}”][vc_column_text]In the Tax Season: Part 3, we take a look at one of the tax planning opportunities available to players.


If you haven’t had a chance to watch the first two videos, check out the videos below.

Tax Season: Part 2

Tax Season: Part 1


The residency decision

In this example, we will discuss the decision of whether to cease Canadian residency for tax purposes and file taxes as a resident of the United States.

Imagine a Canadian-born player living in Winnipeg, Manitoba, who is now playing in Tampa Bay, Florida, for the Lightning. We will assume that they’re earning 5 million as their annual salary and spend time in Canada and the United States. We’re going to look at the difference in the after-tax income that a player can earn based on the tax rates in those two places.



If they’re earning 5 million dollars, we can assume they are in the highest marginal tax bracket in both those jurisdictions.

Starting with Winnipeg, you pay tax both provincially and federally, so the provincial tax rate for the highest tax bracket is 17.4%, and the highest tax rate federally is 33%. The all-in tax rate is 50.4%. To keep things simple, after taxes, you’d have 2.25 million dollars.

In Tampa, if you filed taxes as a Tampa Bay resident, the state tax in Florida is zero. Federally, you’d be in the highest tax bracket, which in the United States is 37 %. All in your tax rate would be 37%. After paying your taxes, your net income, again keeping things simple, is 3.15 million.

On the surface, the difference between paying taxes in Winnipeg and Tampa Bay is $900,000.



This decision can become a relatively huge decision for players. It may make sense for them to cease residency as a taxpayer in Canada and pay taxes in the United States.

However, multiple things will need to be considered. First, do you pass the Substantial Presence Test, and can you actually file as a United States resident?

There are rules and tiebreaker rules that come into effect. Essentially are you spending enough time as a resident of the United States? If not, you will have to pay taxes as a Canadian resident.

The second thing is, do you have any significant assets in Canada. There may be a significant tax liability when deciding to cease residency since your assets will be deemed disposed of when ceasing residency.

Lastly, what happens if you get traded back to Canada, and you want to become a Canadian resident again?

The best option is to discuss your situation with a cross-border tax professional.  They will be able to the above questions and help make the best decision for your situation.


Stay Tuned

In Part 4 of the tax season series, I will be discussing RCA trusts. RCA Trusts are an opportunity in Canada for Canadian taxpayers and pro hockey players to possibly shelter some of that income to make up that difference between how much tax you pay in Canada compared to some of these states that have no income tax.


Looking for more?

Get a head start and download the Pro Hockey Players Guide to Financial Independence!

About Adam

Manitoba Bisons

We’re big believers in the old saying: Love what you do, and you’ll never work a day in your life.

I love hockey, but I didn’t make a living playing the game. Tailoring my financial advising practice toward pro hockey players has allowed me to stay involved in the game in a way I would never have imagined ten years ago.

When I’m not helping my players achieve their financial goals, you can find me spending time at the lake with friends & family, on a golf course, or enjoying a cold beer while watching the Jets play.


Golden Retriever, Rosco

Non-Hockey Sport:

Golf in the summer, Curling in the winter (I know, high adrenaline)


Folk & Acoustic, Rock, Country


The Investor's Podcast Network, Joe Rogan Experience & Spittin Chiclets

Adam Henry is a Winnipeg based Financial Advisor with Harbourfront Wealth Management. His practice is tailored towards working with Professional Hockey Players who are looking for investment, cash-flow management, & tax advice. 

Disclaimer: The views expressed are those of Adam Henry, Investment Advisor and not necessarily those of Harbourfront Wealth Management Inc., member of the Canadian Investor Protection Fund, an IIROC Regulated Firm.