Drug Dealer Gets Tax Break on Lost Money

Dreamer128 · 10-29-2004, 06:36 PM

CANBERRA (Reuters) - An Australian drug dealer who dug up hundreds of thousands of dollars from his backyard to buy heroin but had the money stolen in the deal can claim a tax deduction for his losses, an Australian court has ruled.

Under Australian law, income earned from illegal activity can be subjected to income tax. The High Court of Australia ruled this week that if illegal income is subjected to tax, then losses should be deductible.

The ruling ended a 10-year battle between convicted drug dealer Francesco Dominico La Rosa and the Australian Tax Office, which argued the tax deduction was against good public policy.

Drug dealer Francesco Dominico La Rosa buried more than $164,000 in his backyard in 1995 and dug it up again to buy heroin, but had the cash stolen. La Rosa spent six years in jail for heroin import and possession.

The Australian government said on Friday it would close the tax loophole to stop other drug dealers claiming tax breaks.

"It (the court) said that this drug dealer could claim as a deduction some money that was stolen from him. If that's the state of the law as interpreted by the high court, I don't think it's very good," Treasurer Peter Costello told local radio.

"I will seek to introduce legislation to change that law," he said.

© Reuters 2004. All Rights Reserved.

Aerich · 10-29-2004, 08:56 PM

Nasty. In Canada, income from illegal activity is similarly subject to tax. I certainly hope we never adopt the position that losses are deductible. It's counter-intuitive. (I suppose that's why the Treasurer will amend the Australian Income Tax Act to specifically prohibit it).

Maybe there was something more going on here. It would seem slightly unfair to impose such a tax if the person no longer had the means to pay it. On the other hand, I have no sympathy for dealers of hard drugs.

Timber Loftis · 11-01-2004, 12:45 PM

It's not a loophole, it only makes sense. It's also not a "tax break." Let's say you get $100 from a drug deal, and have to pay taxes on it as income. In this example, we'd look to your tax bracket. In Aussie, let's say the guy is in the 40% bracket -- he must pay $40. Now, if he loses the $100 and claims the loss deduction, all he does is save the $40. No money is gained -- it's just a zero-sum wash.

In the states we just skip over the fact that you can be taxed on illegal income. We skip right to RICO, and charge the people with rackateering and tax evasion (which is what sent Capone to jail). We then use RICO to take their house and possessions as fruits of illegal income. In the end, even if they don't go to jail, they lose most of their worldly possessions. Naaaasty.

armageddon272 · 11-01-2004, 02:47 PM

ive heard a similar story in 2003 (i think) about some guy who got busted for drug deals and said he can't be taxed for the money gained etc... the courts ruled in his favor, end of story, blah blah blah

10-29-2004, 08:56 PM	#2
Aerich Lord Ao Join Date: May 27, 2004 Location: Canada Age: 44 Posts: 2,061	Nasty. In Canada, income from illegal activity is similarly subject to tax. I certainly hope we never adopt the position that losses are deductible. It's counter-intuitive. (I suppose that's why the Treasurer will amend the Australian Income Tax Act to specifically prohibit it). Maybe there was something more going on here. It would seem slightly unfair to impose such a tax if the person no longer had the means to pay it. On the other hand, I have no sympathy for dealers of hard drugs. __________________ Where there is a great deal of free speech, there is always a certain amount of foolish speech. - Winston S. Churchill

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10-29-2004, 06:36 PM	#1
Dreamer128 Dracolisk Join Date: March 21, 2001 Location: Europe Age: 40 Posts: 6,136	CANBERRA (Reuters) - An Australian drug dealer who dug up hundreds of thousands of dollars from his backyard to buy heroin but had the money stolen in the deal can claim a tax deduction for his losses, an Australian court has ruled. Under Australian law, income earned from illegal activity can be subjected to income tax. The High Court of Australia ruled this week that if illegal income is subjected to tax, then losses should be deductible. The ruling ended a 10-year battle between convicted drug dealer Francesco Dominico La Rosa and the Australian Tax Office, which argued the tax deduction was against good public policy. Drug dealer Francesco Dominico La Rosa buried more than $164,000 in his backyard in 1995 and dug it up again to buy heroin, but had the cash stolen. La Rosa spent six years in jail for heroin import and possession. The Australian government said on Friday it would close the tax loophole to stop other drug dealers claiming tax breaks. "It (the court) said that this drug dealer could claim as a deduction some money that was stolen from him. If that's the state of the law as interpreted by the high court, I don't think it's very good," Treasurer Peter Costello told local radio. "I will seek to introduce legislation to change that law," he said. © Reuters 2004. All Rights Reserved.

11-01-2004, 12:45 PM	#3
Timber Loftis 40th Level Warrior Join Date: July 11, 2002 Location: Chicago, IL Posts: 11,916	It's not a loophole, it only makes sense. It's also not a "tax break." Let's say you get $100 from a drug deal, and have to pay taxes on it as income. In this example, we'd look to your tax bracket. In Aussie, let's say the guy is in the 40% bracket -- he must pay $40. Now, if he loses the $100 and claims the loss deduction, all he does is save the $40. No money is gained -- it's just a zero-sum wash. In the states we just skip over the fact that you can be taxed on illegal income. We skip right to RICO, and charge the people with rackateering and tax evasion (which is what sent Capone to jail). We then use RICO to take their house and possessions as fruits of illegal income. In the end, even if they don't go to jail, they lose most of their worldly possessions. Naaaasty.

11-01-2004, 02:47 PM	#4
armageddon272 Symbol of Cyric Join Date: September 20, 2004 Location: Maine, feel sorry for me Age: 34 Posts: 1,163	ive heard a similar story in 2003 (i think) about some guy who got busted for drug deals and said he can't be taxed for the money gained etc... the courts ruled in his favor, end of story, blah blah blah

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