Canadian medalists from the 2010 Vancouver Olympics began receiving their podium bonuses recently, but the cheques came with a letter informing the athletes they are responsible for paying tax on the one-time payments.
"I find that pretty cheap from the government," said Alexandre Bilodeau, the first home-soil gold medalist and the Olympic moguls champion. "I thought the purpose was to give it to the athletes. We helped national pride so much."
In 2007, the Canadian Olympic Committee established the Athlete Excellence Fund, which doles out $20,000 for gold medals, $15,000 for silver, and $10,000 for bronze. It distributed $515,000 to medalists from the 2008 Beijing Olympics, and another $1.665-million to medal winners from the 2010 Games.
"I can't believe they taxed that $20,000," said Jasey-Jay Anderson, the Olympic champion snowboarder who is now retired.
"It's ridiculous. Other countries give retirement funds. I don't think $1-million is needed. I think $20,000 is fair, just don't tax it."
The AEF was viewed as an overdue step in rewarding Canadian athletes who win Olympic medals, but the bonuses pale in comparison to other countries. Russia, for example, rewarded 2010 gold medalists with tax-free bonuses of $100,000 (U.S.). China and Australia have also exempted such payments from taxation. Thailand pays gold medalists more than $300,000 (U.S.), and in the Philippines, Olympic champions receive more than $200,000 (U.S.).
Friday, Chris Rudge, the former chief executive of the COC, said he asked the federal government about making the bonuses tax-free, but said it was a non-starter.
"I'm not sure you can persuade the government to change the Income Tax Act for a handful of people," Rudge said. "Bureaucrats just don't think that way."
Rudge said taxes on the bonuses are offset by annual, tax-free stipends of $18,000 that most medal winners receive from the government, as well as tuition for those studying at postsecondary institutions.
"At the end of the day, there was no way we could get around the Income Tax Act," Rudge said.
Canada Revenue Agency confirmed that the bonuses are considered taxable income, which was made clear when the AEF was established. In other fields, such as prize money for book awards, taxes can be avoided if CRA considers it a "prescribed prize."
Caitlin Workman, a spokeswoman for CRA, said the tax act was amended in 2007 to allow athletes who are registered with a Canadian amateur athletic association to defer taxes on endorsements, prize money and remuneration for athletic achievements by placing the funds in a sheltered account.
The athletes are taxed based on their income levels and province of residency. Many amateur athletes declare little or no income, while others such as Bilodeau, whose Olympic star has led to endorsement and sponsorship opportunities, may be in higher brackets and wind up paying more tax on their bonuses.
"So it's more like 'Here's $15,000 instead of $20,000,'" said Jon Montgomery, the Olympic champion in skeleton. "Whatever. I'll take it."