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Wayne Middaugh is among the best curlers in the history of the sport, but he may become the first to go bankrupt because of his success.
After a battle that has dragged on for several years, Mr. Middaugh must pay the Canada Revenue Agency more than $50,000 in taxes on his curling winnings from 2003 to 2005.
The CRA has threatened to seize assets - including his house - to get its money. It's even reassessed the file of Mr. Middaugh's wife, Sherry, and has said that because of her husband's curling earnings, she is no longer eligible for the federal government's child benefit and must pay back money already sent to her.
Mr. Middaugh has been unsuccessful in appealing a series of rulings over the past 2½ years, and the latest salvo means he must pay or go to court to defend himself.
"They've painted me into a corner," said Mr. Middaugh, who lives in Victoria Harbour, Ont., a cottage community on Georgian Bay, two hours north of Toronto.
"I don't have the money to pay what they say I owe, and I don't have the money to take it to court."
A spokesperson for the CRA declined to comment on the specifics of the case, stating that the agency is bound by confidentiality provisions of the Income Tax Act.
Not only is the matter a personal blow for Mr. Middaugh, but the situation could change the face of competitive curling if the CRA decides to come after other players.
Curlers have played for cash prizes in what are known as cashspiels dating back to the 1940s, but they have never been taxed on their winnings. The reasoning was that so few of the players actually turned a profit on their prizes that the expenses claimed by the teams would force the government to issue refunds.
But in February of 2005, Mr. Middaugh received notice that the CRA wanted him to claim his winnings as income. That set off a long battle that has cost the two-time world champion more than $20,000 in accountant's fees.
Five of his teammates - Graeme McCarrel, Peter Corner, Scott Bailey, Phil Loevenmark and Joe Frans - have also been told they owe money.
Mr. Middaugh appealed the CRA's decision at several levels, but was told his curling was a business and therefore he was a professional.
The current World Curling Tour has a list of 155 teams that have earned money in cashspiels this season. Only seven have won more than $50,000.
That, said Mr. Middaugh, is roughly at the break-even mark for a squad playing on the circuit. He said that with sponsorship money, his rink earned $92,000 in 2007-08 and barely managed to turn a small profit. But a year earlier, he had winnings of just $30,000 and lost money.
"This changes competitive curling completely," said Mr. Middaugh, a golf professional in Port Carling, Ont. "Why would I go and play all these spiels if it's going to end up costing me money? The best thing I could do this week is lose all my games and get the expenses."
Other players also questioned the CRA's decision to go after prize money from the competitive circuit.
"There's no question as to whether curlers make money," said four-time Canadian champion Dave Nedohin. "They don't. They lose. If we made money, do you think any of us would have other jobs? No, we'd be doing this full time."
Mr. Middaugh said the lack of communication from the CRA is frustrating.
"It's almost impossible to get any information from them," he said. "You ask a question and you can't get them to respond. Apparently common sense is not part of their decision making."
At first, the CRA tried to tax Mr. Middaugh on the total winnings of the team, not realizing that four people shared in the prizes. And it counted only his entry fee as an expense, overlooking the costs for travel, accommodation, meals and training.
The CRA also won't reveal how it determines which teams it deems professional. Mr. Middaugh said he was told that Greg McAuley, the 2000 world champion from British Columbia, was classified as an amateur even though he is 11th on the World Curling Tour's money list with earnings of $28,000.
The CRA has contacted no other curlers so far, and Mr. Middaugh is hoping his may be a one-off situation.
"I don't want to take other curlers down with me," he said. "I'd rather declare bankruptcy and get it done."
Several sports agents indicated that they were unaware of any other amateur athletes being audited.
So far, the World Curling Tour Players Association has pledged only moral support for Mr. Middaugh. However, Brian Pallister, Conservative MP for Portage-Lisgar and a curler himself, has raised the issue in the House of Commons and with ministers responsible for the CRA.
"This is a wrong-headed policy," Mr. Pallister said. "It's being done at the expense of common sense."
Special to The Globe and Mail
