tax office now drawn in

The Federal Opposition says allegations AWB claimed tax deductions on kickbacks to the Iraqi regime further link the Government to the wheat scandal.

The Australian Tax Office will investigate revelations at the Cole Inquiry that Australia's wheat exporter claimed tax deductions for kickbacks.

Labor's Kevin Rudd says if the allegations are true, the Government owes the public an explanation.

"What it does demonstrate is that the Howard Government is into this $300 million scandal up to its neck," he said.

The Foreign Affairs Minister, Alexander Downer, told Lateline he does not know about AWB's accounting arrangements.

"I'm sure they didn't put in their tax returns kickbacks and claim a deduction and the tax office said well look that's fine," he said.

The Opposition is also demanding an explanation for Cole Inquiry evidence which suggests AWB executives seconded to Iraq's provisional government secured a top job in the provisional trade ministry for a Saddam Hussein loyalist.

Dave R.