Chris Tanev revealed that a 'departure tax' when leaving Canada was BAD

With some of the highest taxes among all professional sports markets, there has been growing chatter about the disadvantages faced by all seven Canadian franchises when trying to land free agents.

Recently, however, the Maple Leafs found themselves in a unique situation where securing their most sought-after free agent became a bit easier due to the Toronto native's circumstances.

The Maple Leafs signed 34-year-old Chris Tanev to a six-year contract worth $27 million this summer. Many factors led to the veteran choosing to join his hometown team rather than stay with the Dallas Stars, who fell to the Edmonton Oilers in the 2024 Western Conference Final.

Although Texas is one of several states that don't collect income taxes, Tanev was mindful to avoid a certain tax he could have been subject to had he elected to stay in the United States.

"You do have the lower state tax there, but I've played in Canada for 14 years. I'm from here and my wife's family is from close to here. There's also a tax when you leave Canada to become a US citizen; there's a departure tax to leave Canada," Tanev explained when he met with the media to discuss his deal last month.

Tanev has played 792 NHL games over 14 seasons, all with Canadian teams except for 19 games after being traded from the Calgary Flames to the Stars before the trade deadline. Because Tanev's stay in the United States was brief, he wasn't subjected to any tax penalties as a non-resident. However, a longer-term deal with an American team could have exposed him to a departure tax, including capital gains taxes on certain assets in Canada, referred to by the CRA as deemed dispositions.

For younger players drafted by an American team or starting their careers in the United States, the wealth accumulation may not be significant at 18 or 20 years of age compared to 34, making these taxes much more costly for someone like Tanev.

Still, with all the financial loopholes available, it's possible the Stars could have made it worthwhile for Tanev to stay. However, the Leafs also offered $21 million of his total compensation in signing bonuses, including a $5 million bonus this year. A common tactic used by the Maple Leafs is locking up players who don't make elite-level salaries. The $5 million can accrue interest and wealth from the very beginning, making it more lucrative than a salary that wouldn't normally start being paid out until October 15.

But for Tanev, it wasn't solely about the money, although it certainly played a role.

"That plays a role into it and family reasons and obviously coming to a good team is a big part of that," Tanev explained. "I didn't want to leave Dallas and go to a team that wasn't trying to win. That's a huge reason why this happened."

The short answer is no. Tanev's case is extremely unique, with no American ties for either him or his wife. With only a 21 percent chance of being drafted by a Canadian team, being from Canada and having no ties to the United States or elsewhere, Tanev's situation is rare.

It's not often that the Leafs will find themselves with a veteran player who has spent their entire career in Canada and is originally from Toronto where this particular advantage makes sense. While other loopholes for players in Canada, like the retirement compensation arrangement (RCA) plan and the tax breaks associated with signing bonuses, have come under scrutiny by the CRA in recent months, this was an ideal situation for the Leafs to secure the player they wanted.