Former Toronto Maple Leafs general manager Dave Nonis is in a battle with the Canada Revenue Agency over taxation of the remaining years on his contract with the team.
Nonis on Tuesday launched legal action against the CRA in Federal Court, seeking an order compelling the agency to reconsider the withholding of his taxes.
At issue is the taxes on the salary Nonis earned and will earn from the Leafs between 2015, when he was fired as GM, until the end of his contract in 2018.
Nonis claims in court documents that the CRA wrongly instructed the Leafs to continue to withhold a portion of his salary, in payment of Canadian taxes.
Nonis, who worked for the Anaheim Ducks before coming to Toronto in December 2008, says he is a resident in the U.S. and pays his taxes accordingly.
While in Canada, he says, he paid taxes as a non-resident based on the pro rated number of days he was physically in the country. He now works from the U.S. as a consultant for the Ducks.
CRA wrote to Nonis in June to say he will be taxed on the rest of his contract as if he were continuing to spend 40 per cent of his time in Canada, the application claims.
That’s unfair, Nonis argues, because that money will eventually be refunded to him -- possibly not for 18 months -- and he’ll have to get a loan to pay his taxes until then.
“The Applicant would likely have to commercially borrow funds to pay his United States taxes while waiting for a refund from Canada as the amounts payable to the US on his worldwide income could exceed his net income after withhold was taken in Canada.”
Nonis also argues he will lose out on currency exchange for the withheld funds and what he calls the “arbitrage spread” taken by the banks when he converts currencies.
The agency has yet to file a response and none of the claims have been proved in court.
The court application does not mention the amount of money at issue in the dispute.
Maple Leaf Sports and Entertainment surprised some observers in 2013, when they gave Nonis a five-year extension on his contract -- extending it beyond the length of contracts of any Leafs player, save one.
