There is a popular misconception about taxes that they are a modern creation. In fact, taxes in one form or another have existed since the dawn of civilization. We see one of the earliest forms 4500 years ago in Mesopotamia, when a king imposed a toll tax on the bridge that his citizens used daily to cross the river to farm their lands on the other side. All taxes are behavioural. To avoid the toll, the locals began to swim across the river. This was the first manifestation of tax planning.
The king was not amused and responded with a rule that made swimming across the river an offence subject to severe sanctions, such as decapitation. This was the first manifestation of anti-avoidance tax rules. Today, we have the modern version in the general anti-avoidance rule (GAAR) in section 245 of the Canadian Income Tax Act, which is intended to curtail aggressive tax planning.
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