Clarke v Commissioner of Taxation

[2009] HCA 33

Clarke
vCommissioner of Taxation

Court:
High Court of Australia

Judges: French CJ
Gummow J
Hayne 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:
-

Hearing date: 2 September 2009
Judgment date: 2 September 2009

Order

1. Appeal allowed.

2. Set aside order 1 of the orders of the Full Court of the Federal Court of Australia made on 13 June 2008, and in lieu thereof, order that question 3 of the questions referred to the Full Court by the Administrative Appeals Tribunal on 6 July 2007 be answered as follows:

Question 3: -- Are the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) ("the Imposition Act) and/or the Assessment Act [Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth)] invalid in their application to the applicant:

a)
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 the State of South Australia, as to be beyond the legislative power of the Commonwealth; or
b)
on the ground that the Imposition Act imposes a tax on property belonging to the State of South Australia contrary to section 114 of the Commonwealth Constitution?

Answer: -- As to question 3(a), 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 Parliamentary Superannuation Scheme, the State Superannuation Benefit Scheme and the Southern State Superannuation Scheme.

3. First respondent to pay the costs of the appellant.

Counsel for the appellant: P A Heywood-Smith QC with A L Tokley
Counsel for the first respondent: M A Perry QC with M C Wall
Counsel for the second respondent: M G Hinton QC, Solicitor-General (SA ) with M J Wait
Counsel for the Attorney-General (Cth): S J Gageler SC, Solicitor-General (Cth ) with M A Perry QC and M C Wall
Counsel for the Attorney-General (WA): R J Meadows QC, Solicitor-General (WA ) with J C Pritchard
Counsel for the Attorney-General (Vic): P M Tate SC, Solicitor-General (Vic ) with G A Hill
Counsel for the Attorney-General (Qld): W Sofronoff QC, Solicitor-General (Qld ) with G J D del Villar
Counsel for the Attorney-General (NSW): M J Leeming SC with S J Free

Solicitors for the appellant: Johnston Withers
Solicitors for the first respondent: Australian Government Solicitor
Solicitors for the second respondent: Crown Solicitor (SA )
Solicitors for the Attorney-General (Cth): Australian Government Solicitor
Solicitors for the Attorney-General (WA): State Solicitor (WA )
Solicitors for the Attorney-General (Vic): Victorian Government Solicitor
Solicitors for the Attorney-General (Qld): Crown Law (Qld )
Solicitors for the Attorney-General (NSW): Crown Solicitor (NSW )

[1]
Pursuant to s 14ZZ of the Taxation Administration Act 1953 (Cth).

[2]
(2003) 215 CLR 185; [2003] HCA 3.

[3]
Clarke v FCT (2008) 170 FCR 473.

[4]
[2008] HCATrans 375.

[5]
See reasons of Gummow, Heydon, Kiefel and Bell JJ at [38]-[58].

[6]
Superannuation Contributions Tax (Assessment and Collection) Act 1997 (Cth); Superannuation Contributions Tax Imposition Act 1997 (Cth).

[7]
Superannuation Contributions Tax (Assessment and Collection) Act 1997 (Cth), ss 8A, 10(2).

[8]
Austin v Commonwealth (2003) 215 CLR 185 at 232 [65] per Gaudron, Gummow and Hayne JJ.

[9]
Superannuation Contributions Tax (Assessment and Collection) Act 1997 (Cth), s 33.

[10]
Superannuation Contributions Tax Imposition Act 1997 (Cth), s 9.

[11]
CPSF Assessment Act, s 38; Income Tax Assessment Act 1936 (Cth), s 267(1); and Income Tax Regulations 1936 (Cth), reg 177.

[12]
Income Tax Regulations 1936 (Cth), Sch 14.

[13]
CPSF Assessment Act, ss 8, 9, 10.

[14]
A term defined in the CPSF Assessment Act, s 38. The term also includes statutory pension schemes such as the judicial pension scheme considered in Austin .

[15]
CPSF Assessment Act, s 9(4).

[16]
CPSF Assessment Act, s 15(7) and (8).

[17]
Calculated under Div 1 of Pt IIA of the Taxation Administration Act 1953 (Cth).

[18]
CPSF Assessment Act, s 21.

[19]
Statutes Amendment (Commutation for Superannuation Surcharge) Act 1999 (SA), s 4.

[20]
PS Act, s 21AA(6).

[21]
South Australia, House of Assembly, Parliamentary Debates (Hansard), 9 March 1999 at 1036.

[22]
63 & 64 Vict c 12.

[23]
Amalgamated Society of Engineers v Adelaide Steamship Co Ltd ("the Engineers Case ") (1920) 28 CLR 129; [1920] HCA 54.

[24]
See for example Re Australian Education Union ; Ex parte Victoria ("the AEU Case ") (1995) 184 CLR 188 at 231; [1995] HCA 71, referring in fn 211 to Queensland Electricity Commission v Commonwealth ("the Queensland Electricity Commission Case ") (1985) 159 CLR 192 at 217 per Mason J; [1985] HCA 56.

[25]
(2003) 215 CLR 185 at 249 [124].

[26]
(2003) 215 CLR 185 at 249 [124], referring in fn 155 to the AEU Case (1995) 184 CLR 188 at 240, the Queensland Electricity Commission Case (1985) 159 CLR 192 at 249-250, and Victoria v Commonwealth (Industrial Relations Act Case ) (1996) 187 CLR 416 at 500; [1996] HCA 56.

[27]
(2003) 215 CLR 185 at 249 [124].

[28]
(2003) 215 CLR 185 at 301 [281].

[29]
(2003) 215 CLR 185 at 217 [24].

[30]
(1985) 159 CLR 192 at 218.

[31]
(2003) 215 CLR 185 at 217 [24].

[32]
(1920) 28 CLR 129 at 153-155 per Knox CJ, Isaacs, Rich and Starke JJ.

[33]
(1920) 28 CLR 129 at 143-144.

[34]
See the Queensland Electricity Commission Case (1985) 159 CLR 192 at 213 per Mason J, cited in the AEU Case (1995) 184 CLR 188 at 226 per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ.

[35]
(1937) 56 CLR 657 at 682; [1937] HCA 26.

[36]
(1925) 36 CLR 170 at 191; [1925] HCA 30.

[37]
(1925) 36 CLR 170 at 191.

[38]
Federated State School Teachers' Assn of Australia v Victoria (1929) 41 CLR 569 at 584-585 per Isaacs J; [1929] HCA 11.

[39]
Ex parte Professional Engineers' Assn (1959) 107 CLR 208 at 274-275 ; [1959] HCA 47.

[40]
(1995) 184 CLR 188 at 230. A similar distinction, taking as its criterion the traditional governmental functions of the States, was made in National League of Cities v Usery 426 US 833 (1976) but subsequently rejected in Garcia v San Antonio Metropolitan Transit Authority 469 US 528 at 531 (1985).

[41]
Australian Railways Union v Victorian Railways Commissioners (1930) 44 CLR 319 at 390 ; [1930] HCA 52; West v Cmr of Taxation (NSW ) (1937) 56 CLR 657 at 682; Federal Cmr of Taxation v Official Liquidator of E O Farley Ltd (Farley's Case ) (1940) 63 CLR 278 at 316-317 ; [1940] HCA 13.

[42]
Australian Railways Union v Victorian Railways Commissioners (1930) 44 CLR 319 at 392 per Dixon J; see also New South Wales v Commonwealth [ No 1 ] (1932) 46 CLR 155 at 176 per Rich and Dixon JJ; [1932] HCA 7.

[43]
(1940) 63 CLR 278.

[44]
(1940) 63 CLR 278 at 316.

[45]
(1947) 74 CLR 1 at 23; [1947] HCA 15.

[46]
Victoria v Commonwealth ("the Payroll Tax Case ") (1971) 122 CLR 353 at 374-375 per Barwick CJ, 385 per McTiernan J, 392 per Menzies J, 397-398 per Windeyer J, 408-409 per Walsh J, 423 per Gibbs J; [1971] HCA 16.

[47]
State Chamber of Commerce and Industry v Commonwealth (The Second Fringe Benefits Tax Case ) (1987) 163 CLR 329 at 356 per Mason CJ, Wilson, Dawson, Toohey and Gaudron JJ; [1987] HCA 38.

[48]
(2003) 215 CLR 185 at 256 [140].

[49]
(2003) 215 CLR 185 at 257 [142], referring to Melbourne Corporation v Commonwealth ("the Melbourne Corporation Case ") (1947) 74 CLR 31 at 80 per Dixon J; [1947] HCA 26.

[50]
Constitution, s 51(vi).

[51]
South Australia v Commonwealth (1942) 65 CLR 373 ; [1942] HCA 14.

[52]
(1932) 47 CLR 482; [1932] HCA 33.

[53]
(1932) 47 CLR 482 at 488 per Gavan Duffy CJ and Dixon J.

[54]
(1932) 47 CLR 482 at 488 per Gavan Duffy CJ and Dixon J, 488 per Rich J, 491-492 per Evatt J, 496 per McTiernan J.

[55]
(1932) 47 CLR 482 at 485 per Loxton KC for the appellant, see at 488 per Gavan Duffy CJ and Dixon J, 491-492 per Evatt J.

[56]
(1942) 66 CLR 488 at 506-507 per Latham CJ, 513 per Starke J, 533 per Williams J (Rich J agreeing at 510); [1942] HCA 39.

[57]
(1942) 66 CLR 488 at 513 and 515.

[58]
(1942) 66 CLR 488 at 515.

[59]
(1947) 74 CLR 31 at 61 per Latham CJ, see also at 66 per Rich J, 81 per Dixon J, 99-100 per Williams J.

[60]
(1947) 74 CLR 31 at 61.

[61]
(1947) 74 CLR 31 at 67.

[62]
(1947) 74 CLR 31 at 75.

[63]
(1947) 74 CLR 31 at 85.

[64]
(1947) 74 CLR 31 at 78-79.

[65]
(1947) 74 CLR 31 at 99.

[66]
(1959) 107 CLR 208 at 233.

[67]
(1971) 122 CLR 353 at 372 per Barwick CJ (Owen J agreeing at 405), 385-386 per McTiernan J.

[68]
(1983) 153 CLR 297; [1983] HCA 19.

[69]
(1983) 153 CLR 297 at 313.

[70]
(1983) 153 CLR 297 at 313.

[71]
(1971) 122 CLR 353 at 410.

[72]
(1985) 159 CLR 192 at 206.

[73]
(1985) 159 CLR 192 at 206.

[74]
(1947) 74 CLR 31 at 79.

[75]
(1985) 159 CLR 192 at 214, see [24] above.

[76]
(1985) 159 CLR 192 at 217.

[77]
(1985) 159 CLR 192 at 221.

[78]
See (1985) 159 CLR 192 at 243.

[79]
(1985) 159 CLR 192 at 249.

[80]
(1985) 159 CLR 192 at 233.

[81]
(1982) 152 CLR 25 at 93.

[82]
(2003) 215 CLR 185 at 256 [139].

[83]
(1995) 184 CLR 188 at 227.

[84]
(1995) 184 CLR 188 at 227.

[85]
CPSF Assessment Act, s 9(4).

[86]
(2003) 215 CLR 185 at 219 [28].

[87]
(2003) 215 CLR 185 at 262-263 [159]-[160].

[88]
(2003) 215 CLR 185 at 263 [162].

[89]
(2003) 215 CLR 185 at 264 [164].

[90]
(2003) 215 CLR 185 at 264 [165].

[91]
(1947) 74 CLR 31 at 75.

[92]
(2003) 215 CLR 185 at 265 [168].

[93]
(2003) 215 CLR 185 at 265 [170].

[94]
(2003) 215 CLR 185 at 267 [174].

[95]
See at [91]-[92] and [97]-[105] below.

[96]
Clarke v FCT (2008) 170 FCR 473.

[97]
(2003) 215 CLR 185; [2003] HCA 3.

[98]
(2003) 215 CLR 185 at 314-316.

[99]
(2003) 215 CLR 185 at 233-245 [68]-[110].

[100]
See Austin (2003) 215 CLR 185 at 232 [64].

[101]
Selway, The Constitution of South Australia , (1997) at 134.

[102]
Reprint No 9.

[103]
Australia, House of Representatives, Parliamentary Debates (Hansard), 2 October 1997 at 9124.

[104]
(2008) 170 FCR 473 at 477.

[105]
Superannuation Contributions Tax (Assessment and Collection) Regulations 1997 (Cth), Sch 1, Pt 1, Item 173.

[106]
Income Tax Regulations (Amendment) (Cth) SR 1997 No 191.

[107]
(2003) 215 CLR 185 at 242 [99].

[108]
(2008) 170 FCR 473 at 504.

[109]
(1947) 74 CLR 31 ; [1947] HCA 26.

[110]
(2003) 215 CLR 185 at 263 [162].

[111]
See Bank of NSW v Commonwealth (1948) 76 CLR 1 at 337-338 per Dixon J; [1948] HCA 7.

[112]
(2003) 215 CLR 185 at 210-211 [16]. See also Stuart-Robertson v Lloyd (1932) 47 CLR 482 at 488 and 491-492 ; [1932] HCA 33.

[113]
See Austin (2003) 215 CLR 185 at 260-261 [152].

[114]
(2003) 215 CLR 185 at 217 [24].

[115]
See (1947) 74 CLR 31 at 32-34 and 68.

[116]
(1947) 74 CLR 31 at 77.

[117]
(2003) 215 CLR 185 at 217 [24].

[118]
(2003) 215 CLR 185 at 246-249 [116]-[124].

[119]
See, for example, the differing identification of the relevant comparator for the legislation considered in Purvis v New South Wales (2003) 217 CLR 92 at 130-131 [113]-[118], 158-161 [213]-[224]; [2003] HCA 62.

[120]
(1947) 74 CLR 31 at 81 83 and 84.

[121]
(2003) 215 CLR 185 at 249 [124].

[122]
Re Australian Education Union ; Ex parte Victoria (1995) 184 CLR 188 at 240 ; [1995] HCA 71; Queensland Electricity Commission v Commonwealth (1985) 159 CLR 192 at 249-250 ; [1985] HCA 56; Victoria v Commonwealth (Industrial Relations Act Case ) (1996) 187 CLR 416 at 500; [1996] HCA 56.

[123]
(2006) 225 CLR 101 at 113-114 [7], 119-121 [33]-[37]; [2006] HCA 18.

[124]
Including ss 7, 9, 10, 15, 25, 29, 30, 31, 41, 95, 107, 108, 111, 123 and 124.

[125]
South Australia, House of Assembly, Parliamentary Debates (Hansard), 9 March 1999 at 1036.

[126]
(2008) 170 FCR 473 at 503.

[127]
(2003) 215 CLR 185 at 265 [170].

[128]
(1947) 74 CLR 31 at 75.

[129]
(2003) 215 CLR 185 at 265 [168].

[130]
By virtue of the addition by the Merger Act of Sch 3 to the Southern Scheme Act.

[131]
By virtue of the Merger Act.

[132]
See Austin (2003) 215 CLR 185 at 229-230 [57]-[58].

[133]
(2003) 215 CLR 185 at 229-230 [57]-[58].

[134]
Income Tax Regulations (Amendment) (Cth) SR 1997 No 191.

[135]
South Australia, House of Assembly, Parliamentary Debates (Hansard), 24 March 2004 at 1629.

[136]
South Australia, House of Assembly, Parliamentary Debates (Hansard), 24 March 2004 at 1629.

[137]
Austin v Commonwealth (2003) 215 CLR 185 at 260-261 [152]; [2003] HCA 3; Re Australian Education Union ; Ex parte Victoria (1995) 184 CLR 188 at 233 ; [1995] HCA 71.

[138]
Austin (2003) 215 CLR 185 at 217 [24] per Gleeson CJ, 246-249 [116]-[124] per Gaudron, Gummow and Hayne JJ.

[139]
(2003) 215 CLR 185 at 249 [124].

[140]
(2003) 215 CLR 185 at 246 [115].

[141]
(1947) 74 CLR 31; [1947] HCA 26.

[142]
(1947) 74 CLR 31 at 82.

[143]
(1947) 74 CLR 31 at 35.

[144]
(1947) 74 CLR 31 at 79.

[145]
(1947) 74 CLR 31 at 78-80.

[146]
(1947) 74 CLR 31 at 80.

[147]
(1947) 74 CLR 31 at 81.

[148]
(1947) 74 CLR 31 at 81-82.

[149]
Austin (2003) 215 CLR 185 at 260-261 [152].

[150]
s 9.

[151]
See Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth) ("the Assessment and Collection Act"), ss 9(2) and 274 of the Income Tax Assessment Act 1936 (Cth).

[152]
Assessment and Collection Act, s 9(4).

[153]
Assessment and Collection Act, s 15(6).

[154]
Assessment and Collection Act, s 15(4).

[155]
(2003) 215 CLR 185 at 239-240 [89]-[91], 265 [169].

[156]
(2003) 215 CLR 185 at 238-239 [88].

[157]
(2003) 215 CLR 185 at 231 [62].

[158]
(2003) 215 CLR 185 at 231 [62].

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