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Hardie hopes backdated tax law will help fill asbestos black hole

Elizabeth Colman
February 18, 2006 - JAMES Hardie Industries hopes new tax laws introduced this week could help fund its $1.6 billion settlement payout to asbestos sufferers.

The laws, which are backdated to apply from July 1, 2005, could give Hardie millions of dollars in tax breaks on the payout agreed to in December.

The changes, unveiled by Assistant Treasurer Peter Dutton on Thursday, allow businesses to claim tax deductions for a range of costs previously considered to be "black hole expenditures".

The Australian Taxation Office last year knocked back a claim by Hardie for $500 million in tax deductions.

Under a hard-won deal signed in December, Hardie agreed to pay up to 35 per cent of its yearly profits into a fund to compensate people harmed by asbestos products.

The deal, however, was conditional on the company obtaining the tax deductions.

Treasurer Peter Costello declined to pass special laws, despite pressure from the NSW Government and unions to give the global building company tax breaks.

Mr Costello declared Hardie "should be able to take advantage of deductibility of black hole expenditures".

Hardie reportedly negotiated with Treasury during the drafting of the black hole expenditure rules.

It is understood Hardie will apply again for a private ruling based on the new laws if a review of the bill suggests a reasonable chance of success.

"The Treasurer pointed us towards it in his statements last year and now it's something for us to look at," a spokesman for James Hardie said. "We are currently reviewing the Government's proposed legislation for the treatment of black hole expenditures. It would be inappropriate to comment on its implications at this time," he said.

Tax law experts said yesterday the laws appeared not to differ widely from an earlier, confidential draft.

Melbourne University tax law professor Cameron Rider said the laws addressed a key problem.

"You couldn't get a deduction for businesses that have ceased to carry on and that had been a general problem for some time," Professor Rider said.

"One of the changes this new legislation makes is to allow deductions for businesses that have terminated. So that you would think gives some help," he said.

"It has been a long-standing problem and it has been helpful that the change has been made.

"It's not just been a problem for James Hardie, it has been a problem for ... warranty claims by former customers (and) industrial disease claims (for example)."

After a 2001 restructure Hardie no longer owned its former asbestos-making subsidiary - an independent foundation liable for compensation payments to former employees suffering from asbestos-related diseases.

KPMG tax partner Stephen Gottlieb criticised as "restrictive" the earlier drafting and tax office interpretation of black hole expenditure rules.

"The proposed amendments go a long way to addressing this issue," Mr Gottlieb said.

"The income tax law currently subjects virtually all income or gains to income tax - however, there are losses ... which businesses incur where there was no tax relief either through deduction or capital loss."

Lung cancer not always caused by smoking

Lung cancer is often associated with cigarette smoking.

BEIJING, March.9 (Xinhuanet) -- The death of Dana Reeve, Christopher Reeve's widow, from lung cancer has challenged the usual assumption that victims who died of lung cancer were always smokers in their lifetime.

Reeve was diagnosed with lung cancer less than a year ago. Like 15 percent of people diagnosed with lung cancer, she was a nonsmoker.

The usual assumption that victims somehow "asked for it" by smoking has created an unfair stigma, says Lori Hope, a lung cancer survivor and author of Help Me Live: 20 Things People With Cancer Want You to Know. She said, people diagnosed with lung cancer were often being asked whether they smoke.

Hope said research into the disease is underfunded because lung cancer is thought to be a self-inflicted desease due to the stigma.