Let's say you're the Prime Minister and after you step down a nice German man decides to hand you $300,000 in small unmarked thousand dollar bills. You take the brown envelopes and stuff them in a safety deposit box. If you were to try to justify this amount to the CRA they would want you to admit a source. Was it interest, dividends, salary, commission or bribes? Regrettably there is only one category that isn't obviously false so you decide not tell the local tax authorities about your windfall.

Six year later there is talk circulating about your invisible $300,000. You decide to come clean and tell the tax guys and pay up. Now let's see, there was $300,000 and actually it now looks like it really was only $225,000 as there were all those expenses for which there were no receipts. So at a roughly 50 percent tax rate the taxes as calculated by the former Prime Minister work out to about $65,000. Just to double check the PM divides the $65,000 by $225,000 and comes up with 50 percent. Close enough.

What did we learn from the above mathematical exercise? Well seeing as Mr. Mulroney was a lawyer, lawyers can't do numbers. Or maybe it's that if you are a current or former Prime Minister then the Income Tax Act has special applications to you. When you go to file next year ask for the Prime Minster option which is to pay nothing on your offshore earnings and twenty five percent on your domestic income. Remember that under the PM plan receipts for expenses are optional. As Mr. Paul Martin and Mr. Brian Mulroney have shown, the best tax avoidance scheme ever devised by Canadians is to become Prime Minster. Become PM for a day - live tax cheap forever.