Clarke v Commissioner of Taxation
[2009] HCA 33-
The impact of this case on ATO policy is discussed in Decision Impact Statement: Clarke v Commissioner of Taxation & Anor (Published 26 May 2011).
(Judgment by: Gummow J, Heydon J, Kiefel J, Bell J)
Clarke
vCommissioner of Taxation
Judges:
French CJ
Gummow JHayne J
Heydon J
Kiefel J
Bell J
Subject References:
Constitutional Law (CTH)
Powers of Commonwealth Parliament
Taxation
Superannuation contributions surcharge
State parliamentary pensions
Implied limitation on Commonwealth legis-lative power
Melbourne Corporation doctrine
Where appellant former member of South Austra-lian Parliament
Where appellant eligible for parliamentary pension
Whether Acts assessing and imposing superannuation contributions surcharge invalid in application to appellant
Relevance of fact that State Acts passed in response to surcharge
'Curtailment of capacity of the States to function as governments'
'Dis-crimination'
'Special burden'
Legislative References:
Constitution - s 7; s 9; s 10; s 15; s 25; s 29; s 30; s 31; s 41; s 51(ii); s 95; s 107; s 108; s 111; s 123; s 124
Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 - s 5; s 8; s 9; s 11; s 15(6); s 15(7); s 38
Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 - s 4
Superannuation Guarantee (Administration) Act 1992 - The Act
Parliamentary Superannuation Act 1974 (SA) - The Act
Southern State Superannuation Act 1994 (SA) - The Act
Statutes Amendment (Commutation for Superannuation Surcharge) Act 1999 (SA) - s 4
Statutes Amendment (Miscellaneous Superannuation Measures) Act 2004 (SA) - s 14
Superannuation (Benefit Scheme) Act 1992 (SA) - The Act
Case References:
-
Judgment date: 2 September 2009
Judgment by:
Gummow J
Heydon J
Kiefel J
Bell J
[38] This appeal from the Full Court of the Federal Court (Branson, Sundberg and Dowsett JJ) [96] is a sequel to Austin v Commonwealth . [97] In that decision this court held invalid two laws of the Commonwealth in their application to Justice Austin of the Supreme Court of New South Wales, on the ground that they placed a particular disability or burden upon the operations or activities of the State of New South Wales so as to be beyond the legislative power of the Commonwealth. [98]
[39] The laws in question are the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) ("the Imposition Act") and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth) ("the Assessment Act"). They commenced on 7 December 1997 and have been amended. The legislation received detailed treatment in Austin [99] and what follows should be read with an appreciation of that earlier analysis.
[40] In broad terms, the legislation imposed a new tax, called a "surcharge", [100] upon contributions actually or notionally paid for the provision of retirement benefits to a class of persons including the appellant. The appellant complains that, as a former member of the South Australian legislature, he is subjected in a constitutionally impermissible manner to a special and legally different taxation regime from that applicable to persons eligible for, or in receipt of, pensions or superannuation.
[41] In this court, the second respondent, the Attorney-General for South Australia, supported the appellant, as did the intervening Attorneys-General for New South Wales, Victoria, Queensland and Western Australia. The Commonwealth Attorney-General intervened in support of the first respondent ("the Commissioner") and the Commissioner adopted the submissions of the Attorney-General.
The appellant's parliamentary superannuation
[42] The Constitution Act 1934 (SA) provides that the Parliament of South Australia comprises the Legislative Council and the House of Assembly (s 4). In the period in which the appellant was a member of the House of Assembly it consisted of 47 members elected by the inhabitants of the State legally qualified to vote (s 27). The Parliamentary Remuneration Act 1990 (SA) ("the Remuneration Act") conferred authority for payment from the Consolidated Account of amounts of remuneration fixed under that statute (s 6). The Consolidated Account is one of the most important of the ledger accounts maintained at the Treasury. [101] The "basic salary" of a member of the Parliament was fixed by s 3 as an annual salary at a rate equal to $2,000 less than that from time to time payable to members of the House of Representatives as "Commonwealth basic salary".
[43] The appellant was a member of the House of Assembly between 1993 and 2002. During part of that period he was Deputy Leader of the Opposition, an office which attracted additional salary under s 4(1)(b) of the Remuneration Act. The appellant was a member of three superannuation schemes established by statutes of South Australia. The most significant of these for the financial position of the appellant was the Parliamentary Superannuation Scheme ("the PSS"). This was established by the Parliamentary Superannuation Act 1948 (SA) and continued by the Parliamentary Superannuation Act 1974 (SA) ("the PSS Act"). The PSS Act was amended from time to time during the period in which the appellant served in the House of Assembly, in particular by the Parliamentary Superannuation (Establishment of Fund) Amendment Act 1999 (SA) ("the 1999 Act"). It will be sufficient to refer to the statute as in force as at 1 January 2002. [102]
[44] Section 8 of the PSS Act established the South Australian Parliamentary Superannuation Board ("the Board") and s 12 obliged it to submit a report each year to the Treasurer on the operation of the Act.
[45] The PSS Act defined (s 5(1)) a "member" as a member of either House of Parliament of the State, and included those former members still in receipt of a salary. As a member, the appellant was obliged by s 14 of the PSS Act to contribute 11.5% of his salary which was deducted by the Treasurer from his salary. Upon the appellant ceasing to be a member of the House of Assembly on 8 February 2002 by reason of the loss of his seat at an election, and having had not less than six years service, he became entitled for life, pursuant to s 16 of that statute, to a pension of about 43% of his final salary. He continues to receive that pension. There was a limited right of commutation under s 21 of a proportion of the pension which had to be exercised by the appellant within three months of the loss of his seat. The appellant did not exercise that right.
[46] The pension may not be assigned or charged and cannot pass by operation of law (s 38). Were the appellant to be re-elected in the future his pension would cease, but his previous service would again be taken into account for subsequent pension entitlement (s 20). Section 39(1) states that the money required for the purposes of the PSS Act is payable by the Treasurer from the Consolidated Account or from a special deposit account established by the Treasurer for that purpose.
[47] Since the amendments made by the 1999 Act, benefits have been paid from the Parliamentary Superannuation Fund established by s 13 of the PSS Act. The assets of the fund belong, at law and in equity, to the Crown in right of the State (s 13(2)). The fund receives from the Treasurer payments equal to member contributions (s 13(4)(a)); the Treasury may charge the fund with the amount of benefits which are paid and thereby reimburse the Consolidated Account or other special deposit account (s 39(2)).
[48] The particulars of the other two superannuation schemes of which the appellant was a member appear later in these reasons under the heading "The other schemes".
The Imposition Act and the Assessment Act
[49] Section 5 of the Assessment Act states:
The object of this Act is to provide for the assessment and collection of the superannuation contributions surcharge payable on surchargeable contributions for high-income members of constitutionally protected superannuation funds.
[50] In the Second Reading Speech on the Bill for the Assessment Act the responsible Minister said: [103]
The surcharge liability for a member for a year will be accumulated in a surcharge debt account, maintained by the Commissioner of Taxation, for the member and will be payable by the member when the member's superannuation benefit becomes payable. The member will have the option of paying off the debt as it arises once an amount of surcharge has been assessed.
[51] The Full Court gave a summary of the principal provisions of the federal legislation as follows: [104]
Section 4 of the [Imposition Act] imposed the surcharge "on a member's surchargeable contributions for a financial year ...". Section 11 of the [Assessment Act] provided that the relevant member, and not the fund trustee or manager, was liable to pay the surcharge. Section 8(1) of the [Assessment Act] provided that the surcharge was payable on "a member's surchargeable contributions" for a relevant financial year, subject to presently irrelevant exceptions identified in s 8(2) and (3). The term "member" was defined in s 38 of the [Assessment Act] to mean "a member of a constitutionally protected superannuation fund and includes a person who has been a member of such a fund"...
Section 9 defined the term "surchargeable contribution". In so doing it distinguished between two different kinds of superannuation scheme, defined benefits superannuation schemes and others to which we will refer as "accumulation schemes". Section 9(2) and (3) dealt with the latter category, while subss (4), (5) and (6) dealt with the former. Section 9(2) and (4) were the primary provisions. The reason for the distinction lay in the purpose of the legislative scheme, namely to tax superannuation benefits as they accrued. In accumulation schemes such benefits resulted from periodic payments made by employers, employees or both. The desired tax result could be achieved by taxing the amounts so paid. To avoid the problem [presented by s 114 of the Constitution] of taxing State funds, the surcharge was imposed on the relevant office-holders or employees. However some defined benefits schemes could not be so treated. It was decided to tax a potential beneficiary under a defined benefits scheme upon an actuarial valuation of the extent to which the anticipated ultimate benefit under the scheme was attributable to the beneficiary's service during the relevant year. That approach necessarily started with identification of the ultimate benefit. That benefit was generally tied to the relevant beneficiary's salary at, or prior to, the termination of his or her employment.
[52] The PSS was an "unfunded defined benefits superannuation scheme" [105] and was a "constitutionally protected superannuation fund" [106] for the periods for which the Commissioner issued the assessments of surcharge described below.
[53] Of the legislative purpose in the Assessment Act, it was said in the joint reasons in Austin : [107]
The objective here is to create, or at least to identify, by the notion of a member of a constitutionally protected superannuation fund, a class of taxpayers and a "subject of taxation" within the meaning of s 55 of the Constitution. References already made to the provisions in the second half of s 9 dealing with the "notional surchargeable contributions factor" indicate that the legislature had in mind the imposition of taxation partly by reference to notional or fictional constructs.
The litigation
[54] Section 15(6) of the Assessment Act, in the form in which it applies to the appellant, provides that when a lump sum or pension becomes payable for a member whose "surcharge debt account" is in debit, the member is liable to pay the Commissioner the lesser of the amount of the debit and 15% of the employer-financed component of that part of the benefits which accrued after 20 August 1996.
[55] Between 15 February 2000 and 15 February 2005 the Commissioner issued to the appellant assessments of superannuation contributions surcharge in respect of his membership of each of the three superannuation schemes. On 16 August 2004, under s 15(7) of the Assessment Act, the Commissioner issued to the appellant a notice of liability to pay surcharge in respect of his membership of the PSS. Surchargeable contributions under the PSS for the periods ending 30 June 1997-30 June 2001 had been reported in a total of $181,402 and the "surcharge rate" was 15%. A surcharge amount was included in the taxable income of the appellant for each of these five years. Some 93% of the surchargeable contributions were calculated in respect of membership of the PSS, with the result that of the assessed surcharge of $29,260 approximately $27,210 was imposed in respect of the PSS membership of the appellant. Objections by the appellant, based upon the application to his position of the reasoning and outcome in Austin , were disallowed by the Commissioner.
[56] The appellant applied to the Administrative Appeals Tribunal ("the AAT") for review of those decisions of the Commissioner. The AAT then referred three questions to the Federal Court. These were argued before the Full Court which answered the two limbs of Question 3 adversely to the interests of the appellant.
[57] The Full Court, consistently with the decision in Austin , answered "No" to Question 3(b). [108] This asked whether the Imposition Act imposed a tax on property belonging to a State, contrary to s 114 of the Constitution.
[58] In this court the appellant confines his case to the treatment by the Full Court of Question 3(a). The Full Court answered "No" to the question whether the Imposition Act and the Assessment Act are invalid in their application to the appellant on the ground that they so discriminate against the State of South Australia, or so place a particular disability or burden upon the operations and activities of that State, as to be beyond the legislative power of the Commonwealth.
[59] For the reasons that follow, together with those of Hayne J, the appellant should succeed in respect of liability to pay surcharge by reason of his membership of the PSS and of the other two schemes.
The Melbourne Corporation doctrine
[60] The appellant, and the States of South Australia, New South Wales, Victoria, Queensland and Western Australia in his support, rely upon that implication, derived from the federal structure established by the Constitution and consistent with its express terms, which is associated with Melbourne Corporation v Commonwealth [109] and has been elucidated in later authorities, of which Austin is the most recent. The effect of the implication for which the appellant and his supporters contend is to restrain, in addition to the express limitation in s 114 of the Constitution, the scope of the power of the Parliament to make laws with respect to "taxation; but so as not to discriminate between States or parts of States" (s 51(ii)).
[61] Six points may conveniently be made here. The first concerns the emphasis placed in Austin [110] upon both the reference in s 5 of the Assessment Act to "high-income members of constitutionally protected superannuation funds" and the different taxation regime applicable to other superannuation funds as indicative that the Imposition Act and the Assessment Act are not laws of "general application" which the States must take as they find them as part of the system governing the whole community. [111] In Austin [112] Gleeson CJ pointed out, as instances of federal laws of "general application" that validly had been imposed on the States, along with taxpayers generally, pay-roll tax and fringe benefits tax.
[62] The second point is that members of a State legislature are within that class of persons "at the higher levels of government" in respect of whom it is critical to the State's capacity to function as a government that it retain the ability to fix the terms and conditions under which they serve upon election to the Parliament of the State in question. [113]
[63] The third concerns the significance of the size of any financial burden. In that regard the following remarks of Gleeson CJ in Austin are in point: [114]
The adverse financial impact on the States of the pay-roll tax, or the fringe benefits tax, both of which were held valid, far exceeded the financial consequences of the laws held invalid in Melbourne Corporation or Queensland Electricity Commission . It was the disabling effect on State authority that was the essence of the invalidity in those cases. It is the impairment of constitutional status, and interference with capacity to function as a government, rather than the imposition of a financial burden, that is at the heart of the matter, although there may be cases where the imposition of a financial burden has a broader significance.
[64] The fourth point is a corollary to the third. The governmental capacities of the States, for example with respect to the terms and conditions under which parliamentarians serve, often will be manifested in legislation. But this will not always be so. The Melbourne Corporation Case immediately concerned the effect of the Banking Act 1945 (Cth) upon the freedom of the plaintiff to continue to bank with the National Bank of Australasia Ltd, a private bank, rather than with the Commonwealth Bank of Australia. [115] The more general consideration, emphasised by Dixon J, [116] was that State and federal governments being separate bodies politic, "prima facie each controls its own moneys". Further, where there is State legislation, as in the present case, this does not entail the consequence that the question of the application of the Melbourne Corporation doctrine as a restraint upon federal legislative power is to be determined by the methods of comparison between federal and State laws enacted under concurrent powers but said to attract the operation of s 109 of the Constitution. The issue in this appeal concerns alleged federal legislative impairment of the relevant capacity of the State of South Australia.
[65] The fifth point is that in Austin , a majority of the court, Gleeson CJ [117] and Gaudron, Gummow and Hayne JJ, [118] concluded that the notion of "discrimination" by federal law against a State is but an illustration of a law which impairs the capacity of the State to function in accordance with the constitutional conception of the Commonwealth and States as constituent entities of the federal structure. Too intense a concern with identification of discrimination as a necessity to attract the Melbourne Corporation doctrine involves the search for the appropriate comparator, which can be a difficult inquiry [119] and is apt to confuse, rather than to focus upon the answering of the essential question of interference with or impairment of State functions. It also may be that the references to discrimination by Dixon J in Melbourne Corporation [120] use the term in the somewhat different sense of a law which is "aimed at" or places a "special burden" on the States.
[66] This leads to the final point, which indicates the nature of the inquiry for the present appeal. It was made as follows in the joint reasons in Austin : [121]
There is, in our view, but one limitation, though the apparent expression of it varies with the form of the legislation under consideration. The question presented by the doctrine in any given case requires assessment of the impact of particular laws by such criteria as "special burden" and "curtailment" of "capacity" of the States "to function as governments". These criteria are to be applied by consideration not only of the form but also "the substance and actual operation" of the federal law. [122] Further, this inquiry inevitably turns upon matters of evaluation and degree and of "constitutional facts" which are not readily established by objective methods in curial proceedings.
Conclusions respecting the PSS
[67] The practical operation of the Imposition Act and the Assessment Act with respect to State parliamentarians, as much as to State judges in the position of Justice Austin, is to create an obligation on their part to pay a deferred compounding tax when leaving office. An occasion for the imposition of that obligation upon the appellant was his membership of the PSS, which was an incident of his service as a member of the House of Assembly.
[68] The tax which is assessed and imposed by the federal legislation upon the appellant, as upon Justice Austin, is based upon notional contributions and these are determined by actuarial calculations. The result is that the notional contributions upon which the appellant has been assessed bear no necessary relation to the pension he receives. Assumptions as to salary increases, increases in the Consumer Price Index, marital status upon retirement, likely commutation and mortality may reflect "average" experience of members of the PSS without being accurate in their application to the appellant. The result, as New South Wales submitted, is that benefits actually received may be less than those assumed in the actuarial calculations. Moreover, the tax accrues, compounding at market interest rates, until the defined benefit is received, and may approximate the whole of the pension paid under the PSS for the first year.
[69] It may be accepted that some of the considerations present in Austin do not apply to the appellant. In particular, there is the absence of judicial tenure and the requirement for continued electoral success. But the interest of the State in attracting, by the making of suitable remuneration, competent persons to serve as legislators, and thus as potential Ministers, is a long-standing constitutional value. The matter was considered by this court in Theophanous v Commonwealth [123] where reference was made to the remuneration, before Federation, of members of the colonial legislatures. The fixing of the amount and terms of that remuneration is a critical aspect of the capacity of a State to conduct the parliamentary form of government. Numerous provisions of the Constitution [124] assume the continued operation of that form of government in the States.
[70] Section 21 of the PSS Act permitted partial commutation but this was likely to produce a lump sum less than the present value of the pension entitlement. To the federal laws introduced in 1997, the Parliament of South Australia responded in the Statutes Amendment (Commutation for Superannuation Surcharge) Act 1999 (SA) ("the Commutation Act"), s 4 of which introduced s 21AA of the PSS Act. This obliged the Board, on application of a member liable under s 15(6) of the Assessment Act to a deferred superannuation contribution surcharge, to "commute so much of the pension as is required to provide a lump sum equivalent to the amount of the surcharge". The application had to be made not within three months of leaving the Parliament, but within three months of the receipt of the notice by the Commissioner under s 15(7) of the Assessment Act (s 21AA(2)).
[71] The Second Reading Speech in the House of Assembly on the Bill for the 1999 Act indicates the legislative purpose of assisting members who might otherwise lack the means to meet the deferred surcharge liability, the final amount of which might not be known until the due date for payment was past. [125]
[72] The Full Court said of the enactment of s 21AA that the State "was not compelled by the surcharge legislation to make the amendment" and that s 21AA was "a piece of fine tuning". [126] However, the introduction of that provision had a greater significance. It was indicative of the curtailment or restriction of legislative choice for South Australia to provide remuneration to senior office holders. The appellant entered the Parliament under a system provided by the PSS. This provided a life pension after at least six years of service, with a limited right of commutation under s 21. The practical operation of the Assessment Act and the Imposition Act was to curtail the continued exercise of State legislative choice, as expressed in the PSS. The introduction of s 21AA was responsive to and indicative of that curtailment. As Hayne J explains in his reasons, the State was left with no real choice but to provide retirement benefits by a method which enabled parliamentarians to meet the burden imposed by the surcharge legislation.
[73] The Commonwealth Solicitor-General submitted, with respect to the PSS Act, that the basic question was (i) whether the liability to pay the surcharge created a substantial disincentive to take, stand for, or continue in parliamentary office and (ii) if so, whether there was thereby a significant impairment of the ability of the State of South Australia to attract and retain appropriate people as parliamentarians. This frames the basic question too narrowly.
[74] Reference has been made earlier in these reasons to the interest of the State in attracting competent persons to serve as legislators. This supports the proposition that the capacity to fix the amount and terms of remuneration of parliamentarians is a critical aspect of the conduct of the parliamentary form of government by the State.
[75] To adapt what was said in the joint reasons in Austin , [127] one tendency of the federal laws in question here is to induce the States to vary their method of remuneration of members of the legislatures, and:
The liberty of action of the State in these matters, that being an element of the working of its governmental structure, thereby is impaired. No doubt there is no direct legal obligation imposed by the federal laws requiring such action by the State. But those laws are effectual to do so, as was the Banking Act [1945 (Cth)].
[76] With respect to that statute, in Austin their Honours had earlier posed the practical question put by Starke J in the Melbourne Corporation Case . [128] This was: [129]
whether, looking to the substance and operation of the federal laws, there has been, in a significant manner, a curtailment or interference with the exercise of State constitutional power.
[77] The answer with respect to this appeal, as with Austin , is in the affirmative, at least as regards the operation of the PSS.
The other schemes
[78] The surcharge liabilities of the appellant which arose under s 15(6) of the Assessment Act included assessments for 1997 and 1998 in respect of his membership of the State Superannuation Benefit Scheme ("the SBS"), and for 1999, 2000 and 2001 in respect of his membership of the Southern State Superannuation Scheme ("the Southern Scheme").
[79] The first of these was established under the Superannuation (Benefit Scheme) Act 1992 (SA) ("the SBS Act") and the other under the Southern State Superannuation Act 1994 (SA) ("the Southern Scheme Act"). The SBS Act was repealed with effect 1 July 1998 by s 32 of the Southern State Superannuation (Merger of Schemes) Amendment Act 1998 (SA) ("the Merger Act"). [130] The appellant was a member of the SBS from 11 December 1993 to 30 June 1998 and of the Southern Scheme from 1 July 1998 to 8 February 2002; on repeal of the SBS Act by the Merger Act, his benefits in the first scheme were transferred by operation of law to the second scheme. [131] In 2002 the appellant carried over his entitlement (consisting of an "employer" component) to another scheme which does not attract the surcharge under the Assessment and Imposition Acts. The Southern Scheme and the SBS both attracted the surcharge provisions and under the former the appellant would have been entitled to a lump sum benefit on attaining 55 years of age.
[80] Section 14(1) of the Southern Scheme Act rendered, by its own force, a member of that scheme a person in relation to whom the Crown in right of South Australia was liable to pay a superannuation guarantee charge under the Superannuation Guarantee (Administration) Act 1992 (Cth) ("the Guarantee Act").
[81] That federal statute applied to State employees and s 12(5) classified a member of the Parliament of a State as "an employee of the State". Section 16 obliged employers to pay a "superannuation guarantee charge" in respect of the employer's "shortfall" in making stipulated contributions in respect of employees. The effect was to require employers to pay stipulated contributions to a "complying superannuation fund". [132]
[82] The same state of affairs respecting the treatment of parliamentarians as employees of the State and so as members of the SBS had been established by s 4(1) of the SBS Act. This also had "picked up" the definition in s 12(5) of the Guarantee Act.
[83] Unlike the PSS, the membership of these two schemes was not confined to parliamentarians. Membership was linked to the operation of the Guarantee Act which imposed liability to pay a superannuation guarantee charge upon a widely drawn class of employers and employees. This relevantly included "employees" of the State of South Australia and its agencies and instrumentalities. Further, as already remarked, the surcharge amounts in respect of the appellant's membership of the SBS ($491.70 for 1997 and $424.60 for 1998) and the Southern Scheme ($359.35 for 1999, $368.65 for 2000 and $405 for 2001) were much smaller than those in respect of the PSS.
[84] It also should be noted that the appellant, and the State, were drawn into these two schemes only because of the artificial classification by the Guarantee Act of the appellant as a State employee. That may raise a question of whether in this respect the Guarantee Act itself had the character of a law of general application in the sense discussed earlier in these reasons. The circumstances in which the Guarantee Act was introduced were discussed in Austin . [133] But neither in that case nor in the present litigation is any point taken respecting the validity of the Guarantee Act and nothing more should be said here on the matter.
[85] However, the assets of the fund maintained under the Southern Scheme Act (s 4(2)), like those of the fund maintained under the PSS Act, belonged both in law and in equity to the Crown in right of South Australia. Both the SBS and the Southern Scheme, like the PSS, were classed as constitutionally protected superannuation funds. [134] Further, the surcharge legislation represented by the Imposition Act and the Assessment Act was attracted to the appellant as a "high-income" member of constitutionally protected funds, regardless of the amounts later payable in respect of any of the three funds.
[86] The Parliament of the State responded with respect to the operation of the surcharge upon members of the Southern Scheme by the Statutes Amendment (Miscellaneous Superannuation Measures) Act 2004 (SA) ("the Second Commutation Act"). This commenced on 19 August 2004. Section 14 added s 35AA to the Southern Scheme Act, which provided, upon application, for a member liable for a deferred superannuation contributions surcharge, as a result of a benefit becoming payable under the scheme, to commute fully the pension or to receive part of the benefit in the form of a commutable pension.
[87] The Attorney-General, in the Second Reading Speech on the Bill for the Second Commutation Act, said that the proposed law would, among other things, bring members of any of the government's lump sum schemes "into line" with members of the PSS, who "already have the ability to leave part of their retirement benefit in the scheme and use it to extinguish a surcharge liability". [135]
[88] The Southern Scheme was of the general character described above but the Attorney-General was concerned with the differential treatment of "private sector schemes, [where] the fund itself is liable for the surcharge tax" and the impact upon members of "government superannuation funds" [136] generally. To that broad concern the Melbourne Corporation doctrine is not directed. But to higher office holders such as the appellant the same reasoning applies here as to the PSS. There was the necessary impairment of the governmental functions of South Australia. Matters of evaluation and degree are necessarily involved in reaching that conclusion.
Orders
[89] The appeal should be allowed and, in place of the answer given by the Full Court to Question 3(a) of the Questions referred by the AAT, it should be answered that the Imposition Act and the Assessment Act are invalid insofar as they purport to create the liability of the appellant to superannuation contributions surcharge in respect of his membership of the PSS, the SBS and the Southern Scheme, the details of which are set out in para 59 of the Statement of Agreed Facts. The first respondent should pay the costs of the appellant. The second respondent, like the State interveners, should bear his own costs.