Revered players accused of using ‘straddle loss’ scheme to minimize payments, according to Toronto Star report
Two former hockey stars who earned millions playing for the Toronto Maple Leafs have been accused of participating in a foreign currency trading ‘sham’ to avoid paying huge sums of taxes, according to a Toronto Star report.
Darcy Tucker and Shayne Corson deny the CRA’s allegations, which focus on trading during their time playing for the Leafs. In its early years, the both players declared millions of dollars in losses from the venture. But the CRA said this was a deliberate ploy in order to minimize the amount of tax the agency could take from the pair’s salaries.
The Star reported government lawyers involved in an ongoing court battle with Corson as alleging that these trades did not actually happen and that the tax-loss creation scheme “used the appearance of such trading to generate a tax deferral and permanent tax savings”.
More than 150 taxpayers have been reassessed for using the alleged scheme since the CRA began tracking the cases in 2010, with Tucker and Corson the most high profile to date.
Both signed lucrative contracts with the NHL team but from 2000 to 2002, Corson said he racked up more than $7.5 million in losses, while Tucker reported losing nearly $1.02 million in 2001 and $1.14 million in 2002. The CRA reassessed the players’ taxes and hit them with hefty bills. Both separately appealed the reassessments in 2015.
According to the Star’s report, all the purported transactions were done in pairs of opposing trades completed often only a few days apart, so the investors would be buying and selling the same amount of a stable currency over a relatively short time frame. This meant the trades would effectively cancel out one another, meaning no money was made or lost.
The scheme involves what the CRA call a “straddle loss,” the investor closes out the losses for tax purposes in one year, while the offsetting “gain leg” of a nearly identical amount is closed out at a later date when it’s more favourable to the taxpayer.
Tucker abandoned his appeal of the CRA’s reassessments in 2016, according to a letter in the court file, while Corson’s appeal is ongoing.
The full investigative report can be found on the Toronto Star’s website.