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Thanks for the links Monty. I don't think prostitution is illegal anymore (maybe still is in QLD?). There are plenty of legal brothels in NSW. Drug dealing certainly is and here are some links to the case of the drug dealing claiming $220,000 in stolen money as a deduction...

I think there was a case about 10 years ago where a drug dealer had his money seized by (or stolen by) police and he claimed it as a deduction for work related expenses. Sorry, not relevant, but i thought i would throw it in anyway.