Edmonton, March 19, 2002 NHL Players Tax

The Alberta government has responded to a proposal from the Alberta NHL teams that will provide the teams with additional revenue for operational purposes, while not costing the general public any money.

Q. How much revenue is expected to be collected from NHL players?

It's expected the NHL Players Tax will take in about $6 million per full year, which will be split between the two teams, once administration costs have been subtracted.

Q. When will the money start flowing to the teams?

It is expected the levy will take effect at the start of the 2002-03 NHL season. The two Alberta teams will start receiving revenue by the spring of 2003. The tax will be in place until December 31, 2005.

Q. How much is this tax going to cost to administer?

Annual administration costs will be about $150,000. Once again, these costs will be recovered from the revenue collected from the NHL players.

Q. How will this Tax work?

All NHL hockey players who provide a service to their team in a hockey facility on a game day in Alberta will have to pay the tax. The tax will be calculated as 12.5 per cent of the income they earn from performing services on game days at Skyreach Centre or the Pengrowth Saddledome. This includes NHL players who live in Alberta, Canada, the United States and other countries. All players will be subject to the same formula, no matter where they live.

Q. How is the tax calculated?

For each game in Alberta, the individual player's tax will be calculated as follows:

12.5% x player's income* x 1/Duty Days**

* A player's income is the base salary from the hockey team.
** Duty days are the total number of days in a tax year contained within an NHL regular season (each tax year will contain days from two separate regular seasons).

Q. What happens if a player only plays half a game or just practices with the team and doesn't dress for an actual game?

The tax will apply to all players who are active team members. The tax will not apply to individuals on the disabled list unless they are required by their team to be at the hockey facility during a game in Alberta. Practices will not be taxed.

Q. How does Alberta compare with other provinces that have NHL teams? Is there any indication they are going to follow with a similar program?

Alberta is the only province so far to bring such a tax forward. However, other provinces where there is NHL hockey could introduce a similar initiative.

Q. Who would provide the tax credit for foreign players?

The United States would likely provide a foreign tax credit for U.S. residents. Credits for players resident in other countries would be dependant on tax laws in their respective countries.

Q. Will Canadian players receive a tax credit? Canadian players will not receive a tax credit. There will be a provision in Legislation that allows the introduction of a tax credit system with other provinces that introduce a similar tax. The exact nature of the credit would be subject to negotiation.

Q. How will this tax be collected?

Alberta Revenue, Tax and Revenue Administration, will be responsible for administration of the tax. It is very likely that the NHL teams will be required to withhold the tax from the players and remit the withheld amounts to Alberta Revenue.

Q. Why doesn't this new tax violate NAFTA?

All NHL players are being treated in the same fashion, which complies with NAFTA.

Q. How does this tax compare to what American hockey jurisdictions have in place?

In U.S. jurisdictions that impose a tax on NHL hockey players, the tax is part of their regular income tax system. These jurisdictions tax the income of both resident and non-resident hockey players. They also tax other non-residents, such as plumbers and nurses. In Alberta, this will be a separate tax that applies only to NHL players.

Q. What does this new levy do to the tax load for NHL players residing in Alberta?

Most NHL players in Alberta will still face the lowest top marginal rate in Canada and will still be paying less tax than prior to the introduction of Alberta's single rate tax plan in 2001. The NHL Players Tax does not harm Alberta's position of having the lowest overall tax load in Canada.

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For more information, contact:

Ed Greenberg Alberta Finance Communications (780) 427-5364 (780) 718-5699 (cell)