CRA finds that guaranteed salary payments received by a US-resident member of a Canadian team while not in Canada were not taxable in Canada

A resident of the US, who had entered into a 6-year employment contract with a Canadian team, suffered a serious injury in the 3^rd season but, pursuant to a guaranteed payment clause in his contract, continued to receive full salary for the remaining term of his agreement notwithstanding that he ceased playing for that team – and was released by that team, and hired by a US team in the 5^th season.

After finding that the guaranteed payments were employment income to him, the Directorate found that they were not taxable in Canada under s. 115(1)(a)(i), stating that they “did not relate to duties that were performed in Canada during those seasons as he was not physically present to perform these duties.”

Neal Armstrong. Summary of 16 April 2024 Internal T.I. 2023-0964831I7 under s. 115(1)(a)(i).