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1
Commonwealth Places (Mirror Taxes Administration)
COMMONWEALTH PLACES (MIRROR
TAXES ADMINISTRATION) BILL 1999
EXPLANATORY NOTES
GENERAL OUTLINE
Policy Objectives
To enact the Commonwealth Places (Mirror Taxes Administration) Bill
1999 to ensure the proper operation of State taxing laws in relation to the
corresponding Commonwealth applied laws and to facilitate State
administration of the Commonwealth applied laws.
To amend the Land Tax Act 1915 to increase the general rebate from 5%
to 15%.
Reasons for the Bill
Following a High Court decision in Allders International Pty Ltd v.
Commissioner of State Revenue (1996) 186 CLR 630 ("Allders"), which
held that the imposition of stamp duty on a lease of an airport was a law
with respect to a Commonwealth place and invalid under section 52(i) of the
Commonwealth Constitution , the Commonwealth put in place safety net
arrangements to ensure the continued application of taxation laws at
Commonwealth places in each State equivalent to State taxing laws. It did
this through enactment of the Commonwealth Places (Mirror Taxes) Act
1998 (Cwlth) which applies as Commonwealth law Queensland's stamp
duty, pay-roll tax and debits tax legislation.
Enactment of the Commonwealth Places (Mirror Taxes Administration)
Bill 1999 will provide the necessary legislative framework to support the
administration and proper operation of the Commonwealth applied laws in
Queensland. This legislation has been prepared substantially on a nationally
consistent basis for all States.
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Commonwealth Places (Mirror Taxes Administration)
The Land Tax Act 1915 is also to be amended to increase the rebate
available to all taxpayers from 5% to 15%, with effect for the 1999/00 and
subsequent financial years.
Achievement of Objectives
Allders Arrangements
Although considering specifically the validity of lease duty, the High
Court's Allders decision also cast doubt on the validity of all State taxes in
relation to Commonwealth places. To address this uncertainty and to ensure
that Commonwealth places did not become taxation havens, the
Commonwealth announced its intention on 6 October 1997 to impose
stamp duty, pay-roll tax, financial institutions duty (other than in
Queensland) and debits tax on businesses operating at or in Commonwealth
places. The Commonwealth also announced that, should it be necessary,
other State taxation laws may subsequently be applied as Commonwealth
laws with effect on and from 6 October 1997.
The Commonwealth Places (Mirror Taxes) Act 1998 (Cwlth), which
was enacted on 17 April 1998, applies as Commonwealth law at
Commonwealth places in Queensland the Stamp Act 1894, Pay-roll Tax Act
1971 and Debits Tax Act 1990 to the extent to which those laws would be
invalid by virtue of section 52(i) of the Commonwealth Constitution. The
State legislation which is applied is referred to as a State taxing law and the
Commonwealth taxation legislation is referred to as an applied law.
The applied laws for Queensland will commence on the making of an
arrangement by the Governor and the Governor-General pursuant to section
9 of the Commonwealth Act and will then have retrospective effect to 6
October 1997.
A person's total taxation liability under these arrangements is intended to
be the same as it would be if the Commonwealth places in Queensland were
not Commonwealth places. Administrative arrangements are also intended
to be seamless for taxpayers and the Office of State Revenue. For instance,
taxpayers who have liabilities under the Commonwealth and State
legislation will only be required to lodge one return with the Office of State
Revenue and will not be required to separately identify and account for the
Commonwealth and State liabilities. Similarly, it will not be necessary to
separately identify whether liability has arisen under the State or
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Commonwealth Places (Mirror Taxes Administration)
Commonwealth legislation, including where action is being taken to assess
or reassess liability, recover outstanding tax or prosecute a person for failure
to satisfy taxation obligations.
The Commonwealth Places (Mirror Taxes Administration) Bill 1999
provides the necessary legislative framework to support the administration
and operation of the applied laws in Queensland.
Amongst other things, the Commonwealth Places (Mirror Taxes
Administration) Bill 1999:
· authorises the Governor to enter into the arrangement with the
Governor-General, which is necessary for the applied laws to
have effect in Queensland;
· provides the authorisation for State authorities to perform
functions and exercise powers on behalf of the Commonwealth in
administering the applied laws;
· ensures the operation of State taxing laws where a place ceases to
be a Commonwealth place and the preservation of matters arising
under a State taxing law where a place becomes a Commonwealth
place; and
· validates certain actions purportedly taken under an applied law
where that action should have been taken under a State taxing law.
There will be circumstances where amendment of the State taxing laws
and the applied laws will be necessary to ensure that they operate together as
intended. The amendments necessary to the State taxing laws will be
separately legislatively effected.
Any amendments made to the State taxing laws are automatically
reflected in the corresponding applied laws. However, there will be some
cases where the Commonwealth applied laws will require specific
modification to ensure their effective operation together with State taxing
laws. The Commonwealth Places (Mirror Taxes) Act 1998 (Cwlth)
delegates to State Treasurers the power to amend the applied laws in
specified circumstances by way of a notice prescribing the modifications
and published in the Commonwealth Gazette.
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Commonwealth Places (Mirror Taxes Administration)
Amendment of Land Tax Act 1915
To ensure that the increase in the general rebate available to all land
taxpayers first has effect for the 1999/00 financial year, the amendments
necessary to section 9AA of the Land Tax Act 1915 are being effected in the
Commonwealth Places (Mirror Taxes Administration) Bill 1999.
Alternatives to the Bill
The policy objectives require statutory amendment to give them ongoing
effect.
Estimated Cost for Government Implementation
It is not expected that there will be any additional administrative costs.
Consistency with Fundamental Legislative Principles
Retrospective Operation
Although commencing on assent, clause 11 ensures the operation of
State taxing laws and validates matters arising under the applied laws where
a place ceases to be a Commonwealth place either before or after the
commencement of the Commonwealth Places (Mirror Taxes
Administration) Bill 1999. Similarly, clause 12 validates matters arising
under a State taxing law where a place becomes a Commonwealth place
either before or after the commencement of the Commonwealth Places
(Mirror Taxes Administration) Bill 1999.
This reflects the fact that, between 6 October 1997 and the date of the
arrangement between the Governor and the Governor-General, places may
become or cease to be Commonwealth places. On the making of the
arrangement, the applied laws have retrospective operation to 6 October
1997. Therefore, clauses 11 and 12 require retrospective application to
ensure equity of treatment for all taxpayers regardless of where in the State
they operate.
The intention to impose Commonwealth taxes in relation to
Commonwealth places was well publicised by the Commonwealth at the
time that the arrangements came into effect and taxpayers have, in the main,
been acting on the basis that the arrangements apply by continuing to meet
their taxation obligations as they did prior to the Allders decision. In the
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Commonwealth Places (Mirror Taxes Administration)
absence of the retrospective operation of these clauses, taxpayers may either
avoid their State taxation obligations where a Commonwealth place is sold
or may not be bound by the previously applying legislation where a place
ceases to be or becomes a Commonwealth place before enactment of the
Bill. That would be inequitable and contrary to the policy basis underlying
the Allders arrangements.
Consultation
Consultation has been undertaken with other State revenue offices in
developing the Commonwealth Places (Mirror Taxes Administration) Bill
1999. As the intention of the Bill is to ensure the seamless operation of the
Allders arrangements for taxpayers, such that taxpayers may continue to act
as they did prior to the Allders decision, further consultation is not
considered necessary.
NOTES ON PROVISIONS
Clause 1 cites the short title of the Act.
Clause 2 provides that definitions used in the Act are in the dictionary in
the schedule.
Clause 3 specifies that this Act binds the State and, subject to the
limitations on the legislative power of the State, the Commonwealth and the
other States.
Clause 4 empowers the Governor to enter into an arrangement with the
Governor-General in relation to the administration of applied laws, and to
revoke or vary such an arrangement. This power reflects the similar power
given to the Governor-General under section 9 of the Commonwealth
Places (Mirror Taxes) Act 1998 (Cwlth). It is the making of the
arrangement contemplated under this section which commences the
operation of the applied laws for Queensland, with retrospective effect to 6
October 1997.
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Commonwealth Places (Mirror Taxes Administration)
As section 9 of the Commonwealth Places (Mirror Taxes) Act 1998
(Cwlth) requires publication of a copy of the instrument effecting the
arrangement in the Commonwealth Gazette, a similar provision was not
considered necessary for the Commonwealth Places (Mirror Taxes
Administration) Bill 1999.
Clause 5 provides for a State authority to exercise or perform any power,
duty or function that the Commonwealth Places (Mirror Taxes) Act 1998
(Cwlth) requires or authorises it to exercise or perform, despite any State
law.
Clause 6 provides for the continuation of proceedings commenced under
an applied law where those proceedings should have been commenced
under the corresponding State taxing law. This means that a proceeding
does not have to be restarted or any steps taken in the proceedings retaken
when the proceeding has been commenced under an applied law in the
mistaken belief that the State taxing law was excluded by section 52(i) of the
Commonwealth Constitution.
Clause 7 prevents an objection being made in proceedings under a State
taxing law merely on the ground that proceedings have been commenced or
are pending under a corresponding applied law. It ensures that a proceeding
under a State taxing law is not frustrated because a similar proceeding is
also taken under the corresponding applied law e.g. if duplicate proceedings
are instituted because the State authority is unsure of the correct jurisdiction
and needs to establish the applicable law.
Clause 8 provides that, where there is an appeal from a judgment, decree,
order or sentence of a court in proceedings under an applied law and the
relevant law for the proceedings was a State taxing law, the court shall deal
with the appeal as though the proceedings had been brought under the State
taxing law and the judgment, decree, order or sentence was in relation to
proceedings under the State taxing law.
Clause 9 is similar to section 16 of the Commonwealth Places (Mirror
Taxes) Act 1998 (Cwlth) and is designed to facilitate proof of the
Commonwealth's interest in land.
Clause 10 validates things purported to have been done under an applied
law which should have been done under the State taxing law. The provision
will facilitate seamlessness in operation of the applied laws and State taxing
laws by, for example, ensuring that, if a taxpayer pays tax under an applied
law where that tax was payable under the State taxing law, the amount will
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Commonwealth Places (Mirror Taxes Administration)
be taken to have been paid as State tax so that the taxpayer will not be
entitled to a refund and there will be no requirement for a separate payment
of State tax. It will also ensure that a document or return lodged under an
applied law, where the relevant liability arises either under the applied law
and the corresponding State taxing law or solely under the State taxing law,
will be taken to have been properly lodged.
Clause 11 ensures that a State taxing law applies when the corresponding
applied law ceases to have effect when a place ceases to be a
Commonwealth place. The clause also preserves specified matters in
relation to the applied law, including any right, privilege, obligation or
liability acquired, accrued or incurred under the applied law. This provision
has effect where a place ceases to be a Commonwealth place either before or
after commencement of the Commonwealth Places (Mirror Taxes
Administration) Bill 1999.
Clause 12 preserves specified matters in relation to a State taxing law,
including the previous operation of the State taxing law and any right,
privilege, obligation or liability acquired, accrued or incurred under the State
taxing law, where that law ceases to apply in relation to a place where the
place becomes a Commonwealth place. This provisions has effect where a
place becomes a Commonwealth place either before or after
commencement of the Commonwealth Places (Mirror Taxes
Administration) Bill 1999.
Clause 13 provides for a reference to an applied law in an instrument or
other writing to be read as a reference to the corresponding State taxing law
where the applied law does not apply to the matter.
Clause 14 provides for the making of regulations by the Governor in
Council.
Clause 15 provides that Part 6 amends the Land Tax Act 1915.
Clause 16 increases the rebate provided under section 9AA from 5% to
15%.
Clause 17 provides that the increase in the rebate provided under clause
16 first applies to land tax levied for the financial year commencing 1 July
1999.
Schedule provides a dictionary of terms used in the Act.
© The State of Queensland 1999