Bautista v. the King, 2022-2718(IT)G

  • January 09, 2024
  • Sarah Spaner


On August 12, 2023, the Toronto Blue Jays added a new name to its Level of Excellence: José Bautista. The famed slugger and Toronto sports icon played with the team from 2010 to 2018, providing the city with some of its most memorable sports moments like the infamous “bat flip.” The connection between José Bautista and the Jays was such that he signed a one-day contract this summer to officially retire as a Blue Jay. José Bautista’s name is now displayed at the Rogers Centre alongside other Blue Jay greats like Joe Carter, Carlos Delgado, and Roy Halladay.

But sports wasn’t the only newsworthy item involving José Bautista this year. In June, the National Post publicized a tax appeal by Mr. Bautista related to deductions made between 2014 to 2017 under paragraph 8(1)(m.2) of the Income Tax Act[1] (“ITA”). According to the Reply to the Notice of Appeal, the Minister disallowed Bautista's 2014-2017 deductions because of her position that Bautista’s retirement compensation arrangement (RCA) was neither a pension plan nor an RCA within the meaning of the Act.

The Tax Court of Canada (TCC) has rarely considered paragraph 8(1)(m.2) of the ITA. The relevant portion of that provision reads as follows:

8 (1) In computing a taxpayer’s income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto, […]

(m.2) an amount contributed by the taxpayer in the year to a pension plan in respect of services rendered by the taxpayer […] where

(i) the plan is a retirement compensation arrangement,

(ii) the amount was paid to a custodian (within the meaning assigned by the definition retirement compensation arrangement in subsection 248(1)) of the arrangement who is resident in Canada, and

(iii) either

  • (A) the taxpayer was required, by the terms of the taxpayer’s office or employment, to contribute the amount, and the total of the amounts contributed to the plan in the year by the taxpayer does not exceed the total of the amount contributed to the plan in the year by any other person in respect of the taxpayer, or
  • (B) the plan is a pension plan the registration of which under this Act was revoked (other than a plan the registration of which was revoked as of the effective date of its registration) and the amount was contributed in accordance with the terms of the plan as last registered;

When the news of José Bautista’s tax appeal broke, sports commentators expressed concern that the appeal may have far-reaching and chilling effects on Canada’s ability to bring in and retain top sports talents with its major league teams. Because the appeal deals with how non-resident, high-income earners save for retirement and protect their income from Canadian taxes, commentators speculated that a dismissal by the TCC could eliminate certain financial enticements for athletes to play in Canada.  

This article summarizes the facts and tax issues at stake in this appeal.