In the lead-up to the Council of Australian Governments (COAG) meeting on Friday, the state and territory governments have written a joint letter to Prime Minister John Howard asking for a resolution on the James Hardie compensation fund.

The letter asks the Government to overturn a tax office ruling denying tax-free charity status or to make up the $3 billion shortfall.

“At no stage has the Government put forward any alternative solution,” the letter says. “As it is the [Australian Taxation Office] ATO’s ruling has now put the final funding agreement in jeopardy, it is vital that we discuss this matter at COAG,” the letter said.

In December, James Hardie agreed to set up a fund to provide up to $4.5 billion over 40 years to victims, but only if both the fund, and the company’s payments to it, were tax deductible.

Sunrise Exchange News recently reported the ATO has ruled James Hardie cannot treat the compensation fund as a tax-exempt charity, although it will allow the company to claim tax deductions for payments it makes into the fund.