Mulroney says that starting in 1993 he was paid $225,000 by Schreiber in three installments of $75,000 each. In cash. In brown envelopes. In hotal rooms.
Mulroney did not claim this money on his taxes for six years because, he claims, as the payment was a retainer, he didn't have to declare this income until his retainer ended. That sounds fishy to me, but I'm no tax lawyer, so let's take Mulroney at his word and assume that Mulroney was acting in good faith based in this belief.
Mulroney finally declared this income and paid taxes on it in 1999. As Schreiber's legal woes grew, Mulroney decided the retainer was concluded, declared the income, and paid taxes on it.
Er, but wait a minute. Mulroney declared this income under the Canada Revenue Agency's Voluntary Disclosure Program. According to their website, this program:
require that the disclosure be voluntary, complete, involve the application or potential application of a penalty, and generally include information that is more than one year overdue.This CRA program allows people who have been overdue in reporting taxes to pay unreported back taxes, and at the time that Mulroney paid his taxes, at a discount of 50%.
But wait another minute. This procedure is only for "information that is more than one year overdue." According to Mulroney, this information wasn't overdue -- according to him, it wasn't payable until the year he claimed it: 1999.
So Mulroney either was years in arrears in reporting this income and reported it under the VDP, thus allowing for a 50% tax discount, or he reported it on time, but reported under a program it wasn't eligable for and scored a 50% tax discount.
Either way, he handled it inappropriately and ripped off hard-working Canadian taxpayers.
(And why did Mulroney leave this amount of cash in a safe for six years? Why not put it in a bank and get at least some interest on it? For someone who seems well-versed in how to use the tax system, this seems a very odd course of action. But I digress.)