NO TAX ON DRUG CASH: TRIBUNAL

Australia's taxation lobby has lashed out at a ruling this week which
allowed a convicted heroin trafficker to escape paying tax on drug
money.

The drug dealer, who is behind bars for importing heroin, claimed he
should not pay tax on $220,000 stolen during a drug deal.

The Administrative Appeals Tribunal ruled in favour of the
unidentified dealer, saying the money - which he kept buried in his
backyard in Perth - was stolen in May 1995 during the course of his
business.

The ruling reduced the dealer's known income between 1993 and 1996 to
just under $1.1 million.

The tribunal accepted that the money had been stolen despite a lack of
evidence that this was the case. The dealer claimed he received the
money from the Australian Federal Police as part of an undercover operation.

"He submitted it was never his money but belonged to the Australian
Federal Police so he should not be assessed on it," the ruling said.
"And in any event, the money has gone, stolen, so he ought not to be
required to pay tax on it."

But the National Tax and Accountants Association's president, Mr Ray
Regan, said the tribunal's ruling was a "joke" which made a mockery of
the Federal Government's tax system. He called for legislative changes
to close the loophole.

Mr Regan said: "If I want to have someone's legs broken or to pay
someone protection money, is that now a deduction? What about if I
want to pay bribes in the course of my business?"

The Australian Taxation Office said it was considering an appeal but
confirmed that the 1936 Income Tax Assessment Act did not
differentiate between legally and illegally gained income.

"Income is income," a Tax Office spokesman said.

The Attorney-General of Western Australia, Mr Peter Foss, said
legislation to go before Parliament later this year would ensure the
rest of the dealer's wealth could be confiscated.