PERTH, Australia -- An Australian court ruled that a convicted heroin dealer can claim a $165 million tax deduction for money that was stolen during a drug deal.
The Australian Taxation Office lost a bid in the High Court to overturn a lower court decision that Francesco Dominico La Rosa of Perth, the capital of Western Australia state, could write off the money as lost income.
The ATO had been trying to make La Rosa -- who served a 12-year jail term for dealing heroin and amphetamines -- pay tax on his 1994-95 income, which it estimated at $337,000.
But La Rosa insisted his taxable income should be reduced because half that sum had been stolen.
The $165 million had been buried in La Rosa's backyard and was dug up to spend on a drug deal in May 1995, but was stolen during the transaction by unknown people, the court was told.
The ATO had argued it was against policy to allow stolen money as a tax deduction.
The federal government has vowed to change the law to bar losses incurred in deriving illegal income from being claimed as tax deductions in the future.
I think that's fair enough to a certain degree. If they want to charge him Income Tax on it, then they have to let him claim any relevant Tax Deductions incurred in running that "business". The government shouldn't just be able to Tax people indiscriminately.
I've often wondered... how much trouble would I get in if I started dealing drugs, but went through the whole process, registered my business, got my license, kept track of all my transactions and wrote receipts and paid taxes. Basically just "pretend" that it's legal.
IRS: "Uh.... well... your business is technically illegal.. but... hey... you're paying us!"
11-03-2004 07:03 AM
