LAW 2501 Lecture Notes - Lecture 5: Rational Basis Review, Justiciability, Fortescue Metals Group
23 May 2018
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COMMONWEALTH TAX POWER
Summary of PQ process
Facts to look for: fee for services; tax; any time
someone has to pay money and there is no other head
of power (external affairs n/a; defence n/a; says
nothing about ‘corporations’)
STEP 1 s 51(ii) the Parliament shall, subject to this
constitution, have power to make laws for the peace,
order and good government of the commonwealth with
respect to taxation; but so as not the discriminate
between states of parts of states
The issue is whether (the legislation) is supported by s
51(ii). The section will now be interpreted and
compared to the legislation.
1. To be a tax, the law must exhibit (most of)
the positive attributes of a tax
– Yes: go to the next question
✓ a ‘compulsory extraction of
money, by a public authority,
for public purposes,
enforceable by the law and is
not a payment for services
rendered
– No: it is not supported by the tax
power
2. Will not be a tax if the law exhibits any of
the negative attributes of a tax
– Yes: it is not supported by the tax
power
• Fee for service
• Fee for privilege
• Arbitrary extraction
• Penalty
• Charge for acquisition of
property
– No: it is a tax; go to the next question
– Note: Cth can grant financial
assistance to states on any terms
3. Come up with arguments for both side.
– If positive present, but negative are
too, not a tax. legislation not supported
by s 51(ii)- as whole law is invalid,
client need not comply with it
– If positive present and no negative
present. The law is a tax. Will be valid
unless any limits are infringed
4. LIMITS: Does the law discriminate against
a State or part of a State?
– Yes: go to question 4
– No: the law is supported by s 51(ii).
Go to Question 6.
5. Does the differential treatment exist
because the legislature has had regard to
local conditions? (Possible alternative query:
is the law proportionate to a legitimate
objective? Permanent Trustee of Australia &
French CJ in Fortescue. Query whether this is
good law)
– Yes: the law is supported by s 51(ii).
Go to Question 6.
– No: go to question 5.
6. Does the law confer a commercial
advantage on a State or part of a State?
– Yes: the law breaches the preference
limitation of s 99 and is invalid.
– No: the law is still invalid for
breaching the limitation in s 51(ii).
7. ***Does the legislation only deal with
taxation?***
– Yes: go on to question 7
– No: all provisions of the law, except
the section(s) dealing with taxation,
are invalid under s 55 - Laws
imposing taxation shall deal only
with the imposition of taxation, and
any provision therein dealing with any
other matter shall be of no effect
– If the law is incidental to the tax it is
valid: provisions in the tax law
proving for method of collection of tax
8. Does the law deal with more than one
subject of taxation?
– Yes: the whole law is invalid under
– No: the law is supported by s 51(ii)
and does not breach any of the internal
limitations on s 51(ii)
9. Conclude both options
– If valid
– If invalid
find more resources at oneclass.com
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Document Summary
Commonwealth tax power: does the differential treatment exist. Facts to look for: fee for services; tax; any time someone has to pay money and there is no other head of power (external affairs n/a; defence n/a; says nothing about corporations") The issue is whether (the legislation) is supported by s. The section will now be interpreted and compared to the legislation: to be a tax, the law must exhibit (most of) the positive attributes of a tax. A compulsory extraction of money, by a public authority, for public purposes, enforceable by the law and is not a payment for services rendered. Yes: the law is supported by s 51(ii). Yes: the law breaches the preference limitation of s 99 and is invalid. Yes: it is not supported by the tax power: fee for service, fee for privilege, arbitrary extraction, penalty, charge for acquisition of property. No: it is a tax; go to the next question.
