Usually by Canadian tax laws, 1) where you live 6 months + 1 day is where you get taxed. That's why there's a lot of high class workers that live on tax free islands and countries and come back to Québec to sign contracts, then leave again.
I worked at the International Tax Services Office of CRA for several years. I know how residency works (for tax purposes) and how to read tax treaties.
Residency: it has really NOTHING to to with the 6-month rule. Basically, you are a resident of the country where you have the most significant "residential ties" : where you live, where you work, where your bank accounts are, your driver's license, health insurance, etc. It's all based on individual facts, but it is safe to say that most Habs players are resident of Canada for tax purposes, with some exceptions. Let's say a player is only renting a place here, and his wife and kids stay in the U.S., he could easily argue that he is a resident of the U.S. Nothing to do with a specific number of days.
Tax treaty: you have to replace "contracting state" and "other contracting state" with actual names of countries for it to make any sense.
So, XVI(1) says that ", income derived by a resident of a Contracting State
(Canada) as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State
(U.S.), may be taxed in that other State
(U.S), except where the amount of the gross receipts derived by such entertainer or athlete, including expenses reimbursed to him or borne on his behalf, from such activities do not exceed fifteen thousand dollars ($15,000) in the currency of that other State for the calendar year concerned."
What it means is that income from a Canadian resident earned in the U.S. for these specific activities
can be taxed in the U.S, but only if it exceeds $15,000. If it's under $15,000, U.S. can't tax it. In all cases, it does not prevent Canada from taxing it; if it is over $15,000, U.S. will tax it, and Canada will also tax it, but will give a credit for the tax paid in the U.S. Said differently, you don't get taxed twice, but you have to pay to the difference between US and Canada taxes to Canada.
However, XVI(3) says that XVI(1) does not apply to "an athlete in respect of his activities as an employee of a team which participates in a league with regularly scheduled games in both Contracting States". So it XVI(1) does not apply to hockey players.
You are then left with the regular article on employment income, which is article XV. Article XV basically says that income from a resident of Canada earned in the US is taxable in the US, unless it is under $10,000.
Note that it doesn't say "taxable
only in the other Contracting State". So the wording does not prevent Canada to tax it; we simply have to give credit for the taxes paid in the US.
Bottom line:
Canadian residents pay tax on every penny earned, but get credits for taxes paid to the US for games played on the US soil.
Residents of another country only pay taxes on games played in Canada.
