getting murkier every day

Wheat exporter AWB may have claimed up to $90 million in tax deductions for its kickbacks to Saddam Hussein's regime.

And the company also wrote off on tax a $US7 million ($A9.5 million) debt it retrieved from the Iraqi government for a BHP-related company, the Cole commission of inquiry heard.

The new evidence about the wheat exporter's dubious accounting practices follows Thursday's revelation that AWB claimed as tax write-offs much of the $300 million in kickbacks it paid to the former Iraqi dictator's regime.

Labor says the write-offs could be worth up to $90 million on corporate rates and has called for an immediate tax audit of AWB's books.

Treasurer Peter Costello says AWB must face penalties if the Cole inquiry finds that the fees it paid to transport companies and wrote off on tax were actually kickbacks to Saddam.

"If it was paying a transport company to transport wheat it would be tax deductible, of course it would be," Mr Costello told ABC radio.

"If the commissioner says that wasn't a transport fee, that was a bribe, if he says that, then not only are you up for possible prosecution for bribes, but you can't claim it as a tax deduction either.

"If a company has paid bribes and if a company has circumvented the United Nations oil-for-oil program, that's a disgrace.

"And if the findings are that there's a basis for prosecution, yes, I think they should be prosecuted with the full vigour of the law."

Labor's revenue spokesman Joel Fitzgibbon said tax commissioner Michael D'Ascenzo must immediately audit AWB's books to ensure they had not broken any laws.

Mr Fitzgibbon also called for the tax act and the criminal code to be amended to ensure taxpayers were never caught in the same position again.

"What we are calling from the government at the very least is to align the criminal code and the tax act so we get a clear definition of what is and what isn't a facilitation payment," Mr Fitzgibbon told reporters.

"Certainly the $300 million payment to Saddam's regime should not be a facilitation payment and certainly should not be subsidised by the Australian taxpayer."

Foreign Minister Alexander Downer said he had no knowledge of AWB's tax arrangements.

"Surely they didn't put in their tax returns 'kickbacks' and claim a deduction and the tax office said 'well look, that's fine'," he told ABC TV.

Meanwhile, Australian Federal Police (AFP) Commissioner Mick Keelty said his officers were ready to investigate whether AWB had broken any domestic laws.

"We have been liaising with the Cole inquiry and we are awaiting any referral from the Cole inquiry," Mr Keelty told a Senate estimates committee.

"In order to maintain the integrity of investigation that may have to take place, it's probably appropriate that we say little more than that."

Justice Minister Chris Ellison said that was standard procedure with past inquiries and royal commissions.

Dave R.