Hardie's asbestos compensation in doubt over tax  		issue

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Hardie's asbestos compensation in doubt over tax issue

A Taxation Office ruling on the fund James Hardie has set up to pay compensation to asbestos victims has put the whole scheme in doubt.

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A Taxation Office ruling on the fund James Hardie has set up to pay compensation to asbestos victims has put the whole scheme in doubt.

The ruling, handed down last Friday, says the fund will not be treated as a public charity, which means income generated by the fund's investments will not be tax free.

The Tax Office said a further ruling, on whether payments Hardie makes into the fund will be tax deductible, will be made in the next month. Hardie had made the acceptance of both arrangements as tax deductions a condition of going ahead with the compensation fund.

Full liability

However The Australian newspaper today quotes a legal expert on asbestos compensation as saying Hardie could claim the same tax concessions for asbestos payments as CSR and BHP, which have accepted full and direct liability.

He said the company could, rather than have the special purpose fund own its former asbestos subsidiaries, take them under its own corporate wing.

The expert said Hardie was using the tax issue to try to avoid meeting its full obligations by maintaining a cap on payments, whereas CSR and BHP had accepted unlimited asbestos liability.

Prime Minister John Howard yesterday ruled out granting James Hardie Industries a special tax break, despite warnings from ACTU secretary Greg Combet that a failure to do so could see its hard-won asbestos compensation deal fall over.

Meet obligations

‘We strongly believe (Hardie) should meet the obligations to its workers,' Howard said. ‘I do not support a situation where some of James Hardie's responsibility is shouldered by the ordinary Australian taxpayers in some kind of special deal.'

Howard said the ‘really important ruling', dealing with the tax deductibility of Hardie's contributions into the fund, had yet to be decided.

The Federal Opposition leader Kim Beazley said the Government should consider special legislation as an option.

But Howard insisted Hardie would not receive special treatment, saying paying future victims of the asbestos products the building materials giant made until 1987 was the company's responsibility.

Concern

The union movement, the NSW Government and asbestos victims are concerned that their agreement with Hardie, under which it will pay $1.5 billion in claims over the next 40 years to thousands of future asbestos victims, could collapse.

The company has issued a statement saying the final funding arrangement, in which Hardie will pay up to 30% of its net free cashflow each year into a fund for asbestos claims, was in doubt after the Australian Tax Office refused to grant the fund tax-free status as a charity.

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