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Thursday, October 21, 1999
Sens' plan an 'artistic'view of law
But tax lawyer says a court will likely decide if club can avoid paying amusement levy
If all goes as planned...
Rod Bryden, the Senators' principal owner, informed the Ontario finance department of the team's intention to use a charity exemption in the Retail Sales Tax Act to keep from paying about $3.5 million per year in provincial amusement taxes on ticket revenue.
Mark Siegel, a partner with Gowling Strathy & Henderson who specializes in tax law, says Bryden's plan is impressive, despite more comments yesterday from Ontario premier Mike Harris that the team will not get an exemption.
"It's the most artistic interpretation I've ever seen," said Siegel. "You have to give credit to the person who thought up the idea of trying to use the exemption.
"It's very intelligent."
Harris, speaking in Toronto, reiterated the province's stand, saying, "Rod Bryden and the NHL don't set our tax policy."
Bryden sought out thorough legal and accounting advice prior to structuring the agreement with the foundation. The law allows for exemptions from amusement tax if an "event" is sponsored by a charity, but questions could arise because the word "event" is singular, not plural.
Two arguments
The Senators could argue the fact that every game has a different opponent, therefore making it a new event.
Siegel says the entire situation has made for very interesting dinner conversation among local tax lawyers.
Bryden says, "The agreement was to sponsor each and every individual game and each is accounted for separately in the share of the foundation and the rights associated with all that are done on a game-by-game basis.
"All were structured individually precisely for that reason and we're confident the agreement is correctly written to match the exact words of the legislation."
Siegel believes Bryden could win his argument, but says not to forget the government has the power to change the law.
"Given the amount of money involved, I have to believe it's going to end up in court."
In court, Siegel says the drama won't be any less compelling.
"If a first-level judge buys into (Bryden's) argument," he said "it would be very interesting to see if an appeals judge would do the same."
Bryden will be addressing Ottawa Board of Trade members at a monthly Civic Luncheon today.
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