This is a continuation of my Mulroney rant from last post.
While Mr. Mulroney admits to collecting $225,000 as a retainer for services to be rendered to Karlheinz Schreiber, he claims he did not report the amounts as income for tax purposes because he didn’t feel they were earned yet.
Fast forward to 1999, when the amount was finally reported as income. First of all, the event that triggered the reporting was not the fact that anything was earned, it was the fact that Mr. Mulroney was feeling threatened that Schreiber was going to report him to the tax authorities. So, if Mulroney was complying with the tax law as he claimed, why would he worry about such a threat?
Next, if all was above board with this amount of income, why would Mulroney not simply add it to his tax return for 1999? Here’s a fact: the voluntary disclosures route taken by Mr. Mulroney is only available to taxpayers where negligence penalties are involved.
And why, for heaven’s sake, would he not insist on reporting the full amount when his lawyers came to him with the deal they negotiated with the CRA that allowed him to escape tax on half the cash? That’s what I would do if I were a former Prime Minister conscious of my appearance in the public view.
When asked these very questions, Mr. Mulroney simply blamed it all on his lawyers. Trust me when I say that pleading ignorance and relying on professionals never works with the CRA or the courts. Taxpayers, especially sophisticated taxpayers are always assumed to have knowledge of the contents of the tax returns as evidenced by their signatures and are held responsible for them. For someone like Mr. Mulroney to reply to a direct question concerning his taxes with the statement that he “gave it to (his) tax advisers” is the epitome of brazenness.
Mulroney was followed immediately by Wayne Adams of the CRA who tried to explain to the committee much of what I’ve just said. At the end, Commissioner Oliphant said “I listened to Mr. Mulroney for six hours and I find myself more tired listening to an hour and a half of tax law here”.
Charisma. Mulroney’s got it. Tax nerds like me, not so much.