LLB203 Study Guide - Final Guide: Copyright Collective, Airservices Australia, Canadian Airlines
Taxation
The Parliament has power to make laws for the peace, order and good government of
the Commonwealth with respect to: (ii) taxation; but so as not to discriminate between
States and parts of States
Constitution s 51(ii)
INTRODUCTION TO TAXATION POWER- pg 340
Federal taxation power supports legislation imposing income tax, sales tax, company
tax, customs excise duties. The taxation power is a concurrent power
Taxation can also be used as an economic device to encourage or discourage
particular types of activity
Fairfax v Commissioner of Taxation
HELD: the fact tax rates were used to encourage investment in government bonds did not
stop the law from being one with respect to taxation
Given the significance of the taxation of power to the operation of government and the
implementation of fiscal policies, there is a well-developed body of jurisprudence about
the meaning of the term “taxation’’
Colonial anxieties about an over-reaching Commonwealth resulted in a series of
restrictions on the taxation power
Ss 51(ii), 52, 55, 99 and 114
If amending an Aact seeks to turn a valid Act into an invalid Act, it must be the
amending Act that is invalid
Air Caledonie and Tape Manufacturers cases
Essentially a tax is a compulsory ‘’extraction’’ that has the apparent purpose of raising
revenue to be paid into the Consolidated Revenue Fund, out of which it can be
appropriated for any purposes for which the Commonwealth can spend money
Tax can be used as incentive or disincentive to change people’s behaviour:
- Tax used to encourage investment in government bonds : Fairfax v
Federal Commissioner of Taxation
- Discourage employers from paying high previously untaxable ‘’fridge
benefits’’ an more taxable salary: State Chamber of Commerce & Industry v
Commonwealth
- Short lived carbon tax to encourage businesses to reduce emissions
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Elements of a tax
Matthew v Chicory Marketing Board
FACTS: Victorian legislation authorised an agency to make a levy on the producers of
chicory. The money raised was used to meet industry needs such as payment of expenses,
repayment of borrowings, effecting insurance and improving the quality of chicory.
HELD: the legislation imposed taxation upon chicory and was an excise duty.
Classic definition of a tax given by Latham CJ at 270: ‘’a tax…. Is a compulsory
extraction of money by a public authority for public purposes,
enforceable by law, and is not a payment for services rendered’’
Therefore a tax is:
compulsory exaction (usually of money (Air Caledonie International v
Commonwealth)) (see the Pay-Roll Tax case)
by a public authority (Matthews v Chicory Marketing board and Australian
Tape Manufacturers Association v Commonwealth)
for a public purpose (Australian Tap Manufacturers Association v
Commonwealth and Airservices Australia v Canadian Airlines International)
not a fee for services (Harper v Victoria and Parton v Milk Board (Vic))
not a fee for license (Harper v minister for Fisheries)
not an arbitrary exaction (MacCormick v FCT)
not a penalty
(Re Dymond)
not exhaustive list
Air Caledonie International v Commonwealth
FACTS: An immigration clearance fee was imposed on all people entering
Australia (amendment to the Migration Act). The Commonwealth argued that
it was a fee for service.
HELD: the Act imposed a tax.
As Australian citizens had a right to enter Australia anyway, they received
nothing in return for the fee, so it was a tax rather than a fee for service.
Expanded definition of tax (Air Caledonie at p 467)
Comments on statement by Latham CJ:
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Document Summary
The parliament has power to make laws for the peace, order and good government of the commonwealth with respect to: (ii) taxation; but so as not to discriminate between. Federal taxation power supports legislation imposing income tax, sales tax, company tax, customs excise duties. Taxation can also be used as an economic device to encourage or discourage particular types of activity. Held: the fact tax rates were used to encourage investment in government bonds did not stop the law from being one with respect to taxation. Given the significance of the taxation of power to the operation of government and the implementation of fiscal policies, there is a well-developed body of jurisprudence about the meaning of the term taxation"". Colonial anxieties about an over-reaching commonwealth resulted in a series of restrictions on the taxation power. If amending an aact seeks to turn a valid act into an invalid act, it must be the amending act that is invalid.
