In the case Commissioner of Taxation v La Rosa, the court held that the taxpayer, a convicted drug dealer, was entitled to a deduction for a loss that he incurred in earning his income as a drug dealer. The income earned by the taxpayer from his illegal activities had been subject to tax and he had sought a deduction for monies stolen from him in the course of conducting those activities. The Commissioner of Taxation sought special leave to appeal the Full Federal Court's decision but, on 27 October 2004, the High Court refused the application, exhausting the appeal process.

At the time of the High Court's decision in April 2005, the Federal Treasurer announced that income tax laws would be amended to ensure that deductions for income gained from illegal activities would not be allowed. Legislation to bring this into effect is contained in the Tax Laws Amendment (Loss Recoupment Rules and Other Measures) Bill 2005 which was introduced on 14 September 2005.

...back to 22 September 2005


Further information:
Income tax deductions to be denied for illegal activities
The Parliament of the Commonwealth of Australia
The Parliament of the Commonwealth of Australia

Discuss this news item in the PayPerShop Forum