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Abstract

The income tax legislation taxes income ‘from all sources’. On its plain wording, the ITAA is not concerned with how that income is earned or generated. Should we tax illegal gains, such as the profits of crime or the gains of illegality? Equally, assuming the ill-gotten gains are taxable, should the costs of those crimes and illegalities be deductible? To use the words of Hely J in C of T v La Rosa, the subject of this article, can we have ‘[t]he paid assassin … deduct[ing] the cost of his bullets and depreciat[ing] the cost of his gun’? Based on a strict interpretation of the tax law, the answer is yes.

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