EDGE Magazine | Q3 2011


Artists and Athletes


Artists and athletes have always had special circumstances related to their tax issues as the result of the peculiarities of their employment conditions, out-of-pocket expenses related to their professions and the added issues of multi-jurisdictional tax reporting.


Incorporation - Under Canadian law artists and performers may be considered self-employed individuals and may, in some circumstances, even be able to incorporate their business activities. There are numerous tax cases that have supported this position. Even if the performer is a full-time employee they are allowed certain special deductions for the maintenance, rental and insuring of musical instruments. All employed performers and athletes are eligible to claim employment expenses if they are a requirement of their employment contract and the employer has


completed a form T2200 (Conditions


of Employment). The Canada Revenue Agency (CRA) has engaged in some aggressive reviews of such expenses and they are open to challenge.


Athletes face a much different treatment domestically. Those that are not part of a team organization, such as professional golfers, track stars, boxers and tennis players may be able to incorporate and organize their planning to maximize the benefits of Canadian tax rates and also to simplify cross-border tax issues.


However, team sport members such as hockey, basketball, football and baseball players have much more difficult issues to deal with. Previous court decisions support the CRA view that these team members cannot incorporate and therefore are quite restricted in the area of tax structuring. Also, most professional sports are subject to a collective


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agreement and these agreements do not have specific reference to employment expenses. Although clubs have physical conditioning requirements for all players the CRA will not allow the deduction for physical training, off-season conditioning and other related expenses incurred by individual players in order to meet team standards. It would be helpful for these requirements to be considered an employment requirement and allow teams to indicate that these are conditions of employment allowing players to claim the expenses on their personal tax returns.


Foreign Tax Issues – The reality of performers and athletes is that their work regularly takes them into other tax jurisdictions. While the US is the most likely location for many of these individuals, many of them will also find themselves in locales in any number of foreign countries including Canada.


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