''Fairfax v Commissioner of Taxation''
[.] is a
High Court of Australia case that considered the scope of the taxation power in
section 51(ii) of the Constitution.
Facts
The ''Income Tax and Social Services Contribution Assessment Act 1964'',
[.] dealt with
income tax
An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...
and
social services. Section 11 of the Act exempted certain
superannuation funds from income tax if they invested in government securities. Fairfax was subject to the tax but challenged it by arguing it was a law with respect to superannuation funds, not an exercise of the taxation power.
Decision
Per Kitto J:
The Commonwealth law was in substance a law with respect to taxation. A tax does not cease to be valid because it regulates, discourages, or even definitely deters the activities taxed.
The plaintiffs argued that if superannuation funds fully undertook the law, and invested in government securities, then the Section 11 provision would result in no taxation revenue for the government. The Court however thought the issue of raising revenue was a secondary concern. The law was still concerned with taxation because it imposed a taxation obligation. The fact that the purpose was to deter superannuation funds, did not preclude it from being a matter with respect to taxation. As s51(ii) was a non-purposive head of power, like all such powers, it operates on the subject matter.
See also
*
Constitutional basis of taxation in Australia
The constitutional basis of taxation in Australia is predominantly found in sections 51(ii), Legislative powers of the Parliament. 90, Exclusive power over customs, excise, and bounties. 53, Powers of the Houses in respect of legislation. 55, Tax ...
*
Australian constitutional law
Australian constitutional law is the area of the law of Australia relating to the interpretation and application of the Constitution of Australia. Several major doctrines of Australian constitutional law have developed.
Background
Constitution ...
References
{{reflist
*
Winterton, G. et al. ''Australian federal constitutional law: commentary and materials'', 1999. LBC Information Services, Sydney.
High Court of Australia cases
1965 in Australian law
Australian constitutional law
Taxation in the Australian Constitution cases
1965 in case law