![\"Kevin](\"https:\/\/www.newsbeep.com\/ca\/wp-content\/uploads\/2026\/03\/e986fd0eab78f80b956186c7b14c2be4.jpeg\")
Kevin Gausman #34 of the Toronto Blue Jays reacts against the Los Angeles Dodgers in game six of the 2025 World Series at Rogers Center <\/p>\n Kevin Gausman #34 of the Toronto Blue Jays reacts against the Los Angeles Dodgers in game six of the 2025 World Series at Rogers Center <\/p>\n
When Blue Jays pitcher Kevin Gausman signed a five-year, US$110 million deal to play in Toronto, he faced a tax problem that hundreds of thousands of Canadians navigate in smaller, everyday ways.<\/p>\n
Remote workers employed by U.S. companies, freelancers with American clients, cross-border commuters \u2014 all are living inside one of the most misunderstood tax relationships in personal finance: the Canada-U.S. tax treaty.<\/p>\n
The treaty exists to prevent Americans and Canadians from being taxed twice on the same income. Both countries allow a foreign income tax credit for taxes paid to the other, so in most cases you won\u2019t pay full rates in both countries (1). But treaty protection is tied to your residency status, and that\u2019s where things get complicated.<\/p>\n
In Canada, your tax obligations are based on your residency status, not your citizenship. That means anyone who lives and works in Canada must pay Canadian income tax \u2014 regardless of their citizenship.<\/p>\n
In theory, Blue Jays pitcher Kevin Gausman would owe approximately C$16.3 million to the CRA on an annual income of C$30.5 million (the Canadian equivalent of one-fifth of his contract).<\/p>\n
The CRA determines residency by examining ties to the country: whether you have a home in Canada, your spouse or dependants live here, and you hold Canadian bank accounts or retirement savings plans. Turns out significant ties can override treaty protections (2).<\/p>\n
The U.S. handles tax differently. The Internal Revenue Service (IRS) collects tax based on both residency and citizenship.<\/p>\n
In theory, Gausman would owe the IRS about US$8.95 million on his annual US$22 million income.<\/p>\n
Thankfully, the Canada-U.S. tax treaty prevents double taxation, allowing Canadian residents \u2014 including Gausman \u2014 earning U.S. income to claim credits in either country.<\/p>\n
Read more: Here are 5 essential moves to make once you\u2019ve saved $10,000<\/a><\/p>\n Many cross-border workers believe staying under 183 days in Canada keeps them off the CRA\u2019s radar. For employees in cross-border leagues like MLB or the NHL, that\u2019s partly true \u2014 the CRA only taxes Canadian-sourced income if they spend more than 183 days here (3).<\/p>\n Story Continues <\/p>\n But this rule has limits.<\/p>\n Independent contractors don\u2019t qualify for this exemption. According to Cardinal Point Wealth Management, independent contractors may owe Canadian tax on all income earned from Canadian activities, regardless of days spent in Canada (4).<\/p>\n For U.S. citizens living and working in Canada \u2014 like Gausman and other professional athletes \u2014 road games and U.S. spring training don\u2019t count as Canadian activities, so no tax is owed on income earned from these activities.<\/p>\n For Canadians working remotely as contractors for U.S. companies, the contractor\/employee distinction matters significantly.<\/p>\n If the CRA determines you\u2019re a Canadian resident, you\u2019ll face combined federal and provincial tax rates.<\/p>\n According to TurboTax Canada\u2019s 2025-26 calculator, the combined federal and Ontario marginal rate reaches 53.53% at the top bracket (5) \u2014 putting Gausman in the highest tax bracket.<\/p>\n Even at lower incomes, a Canadian resident earning US$80,000 from an American employer could face a larger-than-expected tax bill without careful residency planning.<\/p>\n Cross-border tax planning isn’t exclusively for athletes. Several tools and strategies apply to Canadian residents earning U.S. income.<\/p>\n Track days carefully. The CRA and the IRS both use time-in-country as a key variable. Keeping detailed records of time spent in Canada can help prevent unintended deemed-residency status, according to Cardinal Point Wealth Management (6).<\/p>\n Understand your employment classification. The employee-versus-contractor distinction significantly changes your treaty eligibility. If you’re classified as an independent contractor providing services to a U.S. client, your Canadian tax exposure may be broader than you expect.<\/p>\n Use registered accounts where you can. Canadian residents \u2014 even those earning in USD \u2014 can contribute to a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) based on Canadian-sourced income, reducing taxable income here. Note that RRSP and TFSA rules and limits are set annually by the CRA.<\/p>\n Get cross-border advice before you file. The Canada-U.S. tax treaty has treaty tie-breaker rules that can establish non-residency even for people with Canadian ties, but those rules require a formal assessment. According to Rotfleisch & Samulovitch P.C., a Canadian tax law firm, the legal analysis is nuanced enough that professional athletes and high-earning cross-border workers are advised to seek guidance from a Canadian tax lawyer (7).<\/p>\n Gausman has said he and his wife talk often about how lucky they are to have made the right decision in coming to Toronto. From a lifestyle perspective, that’s clearly true. From a tax perspective, the decision required careful planning \u2014 the kind that most Canadians earning cross-border income don’t realize they need until after the fact.<\/p>\n If you work in Canada, live in Canada, or hold significant ties here while earning U.S. income, the CRA will have an opinion about what you owe. Talking to a qualified cross-border tax adviser before you file \u2014 not after receiving a reassessment notice \u2014 is the only way to know where you actually stand.<\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Canada Revenue Agency (1<\/a>); Turbotax: The USA\/Canada Tax Treaty Explained (2, 7<\/a>); Rotfleisch & Samulovitch P.C. via Mondaq (3<\/a>); Cardinal Point Wealth Management (4, 6<\/a>); TurboTax Canada (5<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Kevin Gausman #34 of the Toronto Blue Jays reacts against the Los Angeles Dodgers in game six of…\n","protected":false},"author":2,"featured_media":568653,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[194291],"tags":[1513,218840,49,48,127273,218841,14562,218839,3302],"class_list":{"0":"post-568652","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-toronto","8":"tag-blue-jays","9":"tag-blue-jays-pitcher","10":"tag-ca","11":"tag-canada","12":"tag-canadian-residents","13":"tag-cardinal-point-wealth-management","14":"tag-kevin-gausman","15":"tag-tax-treaty","16":"tag-toronto"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/568652","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=568652"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/568652\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/568653"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=568652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=568652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=568652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}