The Federal Government will consider changing the law to ensure tax deductions that relate to income gained from illegal activities are disallowed, the Minister for Revenue and Assistant Treasurer, Senator Helen Coonan said today.
"The Federal Government is concerned at a ruling by the Full Bench of the Federal Court that has permitted a drug dealer to claim a tax deduction for money stolen from him that was gained from illegal drug sales," Senator Coonan said.
"The Government takes the firm position that no one should benefit from the proceeds of crime," she said.
The Government recently implemented a number of initiatives to strengthen the law relating to proceeds of crime.
Both the Administrative Appeals Tribunal and the Federal Court have agreed with the Commissioner of Taxation that income earned from illegal drug dealing should be subject to taxation.
"However, the area of dispute is about whether, in respect of income earned from illegal activities, deductions should be allowed as a matter of public policy," Senator Coonan said.
The Tax Office argued that the law should be interpreted as denying deductions for illegal activities.
The Commissioner of Taxation will now decide, on legal advice, whether to seek leave to appeal the case to the High Court.