Home Away From Home?

Canada’s average male height may be 175.1 centimetres, but don’t be surprised if that number sees a jump in Toronto this weekend: if you're a fan of the NBA, you're well aware that NBA All-Star Weekend has arrived. Basketball's best and brightest have descended upon Toronto for the festivities taking place at the home of the Raptors (and their global ambassador, Drake). Luckily for Kyle Lowry and DeMar DeRozan, who are representing the Raptors this weekend, they'll be playing at home. However, that's not always the case. The NBA schedule requires half of the regular season games as well as some pre-season and post-season games (assuming the teams are lucky enough) to be played outside of the province of Ontario. Each time the team travels to another city for a game, they always use the exact same locker rooms, training facilities, etc. In the eyes of some, these facilities could be considered their home away from home.

As players from all over North America call the ACC their home for the weekend, it is interesting to look at the legal implications of all this travel: if you play for a professional sports team and are out of the province for a game, are the facilities that you use legally considered a "permanent establishment"?

In April 2004 the Toronto Blue Jays Baseball Club (Toronto Blue Jays) and Maple Leaf Sports & Entertainment Ltd. (Toronto Raptors and Toronto Maple Leafs) brought an application to provide guidance on whether the locker rooms, coaches’ rooms, and training facilities the teams operate out of are "permanent establishments" of the organizations (as defined in section 1 (2) of the Employer Health Tax Act, RSO 1990, Chapter E). Employers in Ontario are required to pay a health levy based on total Ontario remuneration, and if employees work in an employer's permanent establishment outside of Ontario, that establishment is exempt from the base on which the tax is levied. So if the facilities that the Toronto Raptors use when they’re out of province are considered permanent establishments, Maple Leaf Sports & Entertainment Ltd. would be exempt from the employer health tax when activities are conducted at those locations.

It was ruled that these facilities were indeed considered permanent establishments, as each team carries on business in conjunction with the other teams in the respective leagues, making out-of-province training facilities part of a "fixed place of business". You could compare this to a lawyer in Toronto traveling to their firm's New York office once a week, as they would be regularly working at their employer's office outside of Ontario.

But that wasn’t the end of it. In February 2005 the Minister of Finance for Ontario appealed the decision, as they took issue with the judge's interpretation of what constitutes a permanent establishment. The presiding authorities on the appeal agreed that the Blue Jays' pre-season training facility in Dunedin, Florida can be considered a permanent establishment, as the team leases the venue and controls the operations. Unfortunately for the Toronto teams, the judges ruled that the locker rooms and training facilities that the teams operate out of when playing games on the road are only transitory. The teams themselves do not own or lease the buildings, nor do they control the venues, and therefore they cannot be considered fixed places of business.

Looks like “We The North” doesn’t apply to the Raptors' locker rooms at other venues. Even sports teams can't catch a (tax) break!