Jonathan Ruben, Chartered Accountant and Certified Public Accountant (New York - Illinois - Michigan) is called upon to give his expertise for financial and accounting articles in publications such as 'The Toronto Star', 'CA Magazine', 'Investment Executive', 'MoneySense' and 'The Financial Post' along with radio, television and online publications including '', '680News' and TSN's 'The Business of Sports'.

Athletes Have Got It All Wrong, Say Tax Advisors
By Tony Van Alphen; Business Reporter
The Toronto Star

Some multi-millionaire professional athletes from the United States say they don't want to play for a Canadian club because the taxation hits them a lot harder than south of the border.
But Canadian teams and tax experts argue that after they add it all up and the government takes a good chunk away, the difference between the two countries can be minor for those wealthy sports stars.
It's a matter of simply taking advantage of some basic provisions under the tax law, accountants and tax lawyers say.
"They can achieve a pretty level playing field," says Dennis McMullin, a tax partner at Deloitte & Touche in Winnipeg. "You can get fairly close with advanced tax planning."
The tax bogeyman popped up again recently when trading speculation swirled around the Toronto Raptors basketball club. Star Raptor point guard Damon Stoudamire cited it as a reason why he wanted to get out of town.
Houston Rockets centre Kevin Willis, who was almost traded to the Raptors told USA Today the differences in the structure were " a huge deal" and "pretty hard to swallow."
"They're not getting good advice," concludes Bill Johnston, an Ottawa tax lawyer who structures pro athlete contracts to minimize taxes. In fact some accountants say a New York Knicks star can end up with paying more income tax than a rich Raptor.
Tax lawyers and chartered accountants acknowledge that income tax rates are higher in Canada than in the United States, but they say some U.S. agents and players exaggerate the gap.
In Ontario, the rate is 51.64% for anyone with taxable income of more than $63,500. In New York and California, it's about 50% on income of $278,000(U.S.). All major league athletes with U.S. clubs easily make more than that and face the full hit.
The rate on a pro baseball, hockey or basketball player in Ontario drops below 51% even before devising the first tax strategy. That's because the effective tax rate for a U.S. pro athlete in Ontario declines every time he works south of the border in games and practices during the season.
He usually spends about 35% of his work time in the U.S. That automatically reduces the Canadian tax bite. Structuring a contract with tax rules in mind can reduce the sting further, according to experts.
Jonathan Ruben, a Toronto chartered accountant, says higher-paid athletes can negotiate a "retirement compensation arrangement" that defers income and can help the club and player since they don't pay the taxes until after the contract expires. "It's essentially an unregistered retirement savings plan," says Ruben, who provides tax advice to wealthy people, including major league athletes in Toronto.
Under this arrangement, the team makes contributions to a "custodian" or trustee. Payments could be subject to a lower tax rate because they are spread over a longer period of time.
The player receives benefits after he quits, or the team fires him. Athletes can negotiate a similar arrangement, commonly known as an "employee benefit plan," under which the club also pays a good chunk of its income annually to a trustee for investment.
Revenue Canada can tax the investment earnings every year while the athlete plays but not the income that the club paid. The club doesn't get a tax deduction until the player starts drawing down the funds and paying taxes.
"Players can select investments to acquire growth prospects so there is little annual income," says McMullin. "Growth appreciation is reflected in enhanced value of investment, which builds a pool of capital for retirement."
McMullin says there are no such tax provisions that benefit athletes in the United States. On the other hand, U.S. residents can write off mortgage interest and property taxes. Canada doesn't have those tax breaks.
Meanwhile, Johnston says some athletes can negotiate their contracts to minimize the tax hit without even setting up a retirement or benefit plan with a club. He says an athlete can negotiate a good portion of his contract in the form of a signing bonus. It's taxable here at a rate of 15% under the Canada-US tax treaty. That rule effectively allows the athlete to get full U.S. foreign tax credit against Canadian taxes, Johnston says.
"It means the player pays at the U.S. rate."
In addition to different ways of minimizing tax, experts say some U.S. athletes don't take into account the big bang they get from the American dollar in purchasing goods in Canada. All major pro stars playing here get their salaries in U.S. dollars, which is worth $1.42 (Canadian).
Ruben, a member of the New York and Illinois state societies for certified public accountants, and McMullin add that Canada offers those athletes safer cities, better schools and health care, fresher air and extensive cultural attractions.
The Raptors are currently working on an information package for agents and players who will be free to change teams this summer. It will emphasize the city's merits and lifestyle, clarify the financial benefits and offer assistance so players can reduce their exposure to income taxes.
"There are fears the taxes are much higher here, but it's not true," says John Lashway, vice-president of corporate and community development for the Raptors. "There has to be an education. We have to show players and their agents how thehow ththe hows work and all the advantages of living in Canada."
Some league insiders suspect a few agents are trying to portray Canada in negative terms to create perceptions of marketing limitations and cultural shock here so their clients stay away,
But Lashway says that although Toronto is not New York, Chicago or Los Angeles, few other cities offer the national and local marketing potential of Toronto or the quality of life.
"It's ludicrous some of the things we've been hearing about Toronto and the taxes."

Will Jose Reyes Get Hit By His Tax Bill?
Andrew Livingstone November 16, 2012

The pending blockbuster trade between the Toronto Blue Jays and Miami Marlins was greeted warmly by many Canadian fans. But for the players, one dark financial cloud hangs over the deal.
In the wake of the yet-to-be-confirmed trade, which would bring star players Jose Reyes, Mark Buehrle and Josh Johnson to Toronto, media south of the border have reported that players would pay much higher taxes working in Canada than they would in Florida.
Reyes, who will make $10 million (or $61,028 per game) in 2013, would be hit hardest by the Canadian taxman. With $96 million remaining on a $106-million, six-year contract, Reyes would pay nearly an extra $9 million in taxes over the course of the final five years of the deal he originally inked with the Marlins.
If Reyes files taxes in the states he plays half his games in each season — which he is able to do — the Canadian tax burden would be less.

In the past, athletes have been concerned about playing in Canada because of the tax rates. Former Raptor Damon Stoudamire said a big reason he wanted out of Toronto was the taxes he had to pay, and former Raptor Kevin Willis was outspoken about the taxes in Canada.
Athletes making over $1 million in California pay 45.3 per cent in federal and state tax, while players in New York pay 43.82 per cent (players in New York City would pay more because of city tax) — slightly less than 49.53 per cent the richest Ontario residents would pay in 2013.
However, U.S.-based players in Canada can cash in foreign tax credits from the Internal Revenue Service. "He will eventually get it back," said Richmond Hill-based accountant Allan Garber. "As long as he continues to play in Canada, the U.S. will continue to give him a foreign tax credit."
If Reyes only plays two or three years in Toronto, he'll still amass tax credits for those years, and could use them in future years while playing for an American ball club.
Retiring a Blue Jay might make it hard for Reyes to use those credits. Accountant Jonathan Ruben said while the four-time all-star could get back a portion of what he paid, he could struggle to do so if he's not making major-league money after his baseball career is done, and he might not use all the credits he'd amass from the life of his current contract.
"You'd need to have earnings to get those tax credits back similar to the amount taken," Ruben said. "It's one thing if you continue to earn $5 million a year, but if you're making average money, it'll be difficult."
The five players apparently coming to Toronto — Reyes, Buehrle, Johnson, utility player Emilio Bonifacio and catcher John Buck — will be hit with higher income taxes (Florida has no state tax, so players there would pay 36 per cent; in Canada, it would be 46.4 per cent with federal and provincial tax), said Garber.
But there are ways to get around the full tax hit, he added, such as using an income-deferring registered compensation agreement. The team could put a portion of his salary into an account, and when he leaves the organization he'd get it back and pay only 15 per cent tax on it.