NO.142

LABOR CAUGHT OUT OVER AWB

Labor has attempted to insinuate that it has some change to the tax law that would render payments made by AWB disallowable as deductions against assessable income.

Labor has never supported any such change.

On 28 March this year, Labor moved an amendment to the Tax Laws Amendment (2006 Measures No.1) Bill 2006 to align the facilitation payment provisions in the Income Tax Assessment Act and the Criminal Code (Hansard, 28/03/06, p66). 

But Commissioner Cole found that the AWB payments could not be classified as bribes under the Criminal Code.  As the Cole Report states (Vol 5 p347):

…the inland transportation fees and after-sales-service fees were demanded of, or levied from, AWB as a result of directives or orders from Ministers or Ministries of the Iraqi Government. The fees were akin to a tariff imposed by the Iraqi government on all goods imported under the Oil-For-Food Programme.”

And (Vol 5 p348):

It follows that, at least in relation to the payment of inland transport and after-sales-service fees, there is no reasonable basis for concluding that an offence may have been committed against subsection 70.2(1) of the Criminal Code. [Bribing a foreign official]

So Labor’s amendment to align the ITAA with the Criminal Code would have left AWB’s payments not contrary to the Criminal Code and therefore fully tax deductible.

Shadow Treasurer Wayne Swan yesterday falsely claimed this amendment would have prevented AWB’s payments from being tax deductible.

Mr Rudd should ask his Shadow Treasurer to cease making false claims. This is either incompetence or deceit.

MELBOURNE

21 December 2006

Contact:

Renae Stoikos – 03 9650 0244