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Wednesday, October 20, 1999
Senators may get tax break
OTTAWA (CP) -- A noted tax expert says the Ottawa Senators have a case in their fight against the provincial amusement tax.Ian Sherman says a strict reading of the Retail Sales Tax Act without any interpretation supports Senators principal owner Rod Bryden's contention that the 10-per-cent provincial ticket surtax does not apply to the team.
"Rod seems to be on to something here," said Sherman, a chartered accountant and tax partner at Ernst and Young.
On Monday, Bryden announced that sponsorship of Senators games by the Ottawa Senators Foundation, a registered charity, exempted the team from paying the contentious tax.
While Sherman contends his analysis is preliminary and could be overtaken by further research, he thinks the Senators' position is substantial.
"The Senators and Rod have perhaps found something," Sherman said. However, "In tax law, you have to read every word carefully."
Case law precedent could also hurt the Senators' case, Sherman said, but he has not done the research to know categorically if that is true.
As well, "there are sometimes anti-avoidance provisions" to the law, Sherman said.
The tax expert also wonders if the government might question the degree to which the Ottawa Senators Hockey Club and the Ottawa Senators Foundation are separated.
Section 9.2 of the Retail Sales Tax Act, which the Senators are contending, reads: "The tax imposed ... is not payable in respect of the price of admission to any entertainment, event, dance, performance or exhibition ... (where it) is staged or held in a place of amusement by, or under the auspices or sponsorship of ... a registered charity."
Officials of the foundation hope to raise about $600,000 for area charities this year. The Senators' exemption from the amusement tax would total about $3.5 million.
The Senators are looking for about $10 million in tax relief from the three levels of government so they can compete with heavily subsidized U.S. counterparts.
Bryden, the Senators' principal owner has set a June deadline for keeping the club here, though he has also said that last summer and December were target dates for starting to look for a new owner in the U.S. The team lost between $7 million and $10 million last season, Bryden has said.
Sherman believes the Ontario finance ministry or the courts will finally decide the issue.
"There are enough dollars at stake" to see the case end in court, Sherman said.
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