Fairfax v Commissioner of Taxation
Encyclopedia
Fairfax v Commissioner of Taxation (1965) 114 CLR
1 is a High Court of Australia
case that considered the scope of the taxation power.
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, and challenged it by arguing it was a law with respect to superannuation funds, and not an exercise of the taxation power.
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.
Commonwealth Law Reports
The Commonwealth Law Reports are the authorised reports of decisions of the High Court of Australia. The CLR are published by the Lawbook Company, a division of Thomson Reuters...
1 is a High Court of Australia
High Court of Australia
The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, has the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the States, and...
case that considered the scope of the taxation power.
Facts
The Income Tax and Social Services Contribution Assessment Act 1964 dealt with income taxIncome tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
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, and challenged it by arguing it was a law with respect to superannuation funds, and 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 AustraliaConstitutional basis of taxation in AustraliaThe constitutional basis of taxation in Australia is based on a group of powers in the Australian Constitution: sections 51, section 90, section 53, section 55, and section 96...
- Australian constitutional lawAustralian constitutional lawAustralian 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....