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This Digest was prepared for debate. It reflects the legislation as
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Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Passage
History
Date Introduced: 5 March 1998
House: House of Representatives
Portfolio: Treasury
Commencement: This Bill will be taken to
have commenced on 6 October 1997.
Purpose
The Commonwealth Places Windfall Tax
(Collection) Bill 1998 (the Windfall Tax Collection Bill) is part
of a package of four Commonwealth Bills dealing with the
consequences of the High Court's decision in Allders
International Pty Limited v Commissioner of State Revenue
(Victoria) (Allders).(1) The package of legislation
is designed to overcome constitutional obstacles, so that certain
State taxes will continue to apply to Commonwealth places located
within the States and past State revenues are protected.
The purpose of the Windfall Tax Collection Bill
is to define the liability for windfall tax, provide for its
collection and deal with miscellaneous matters relating to its
administration.
Together with its companion law, the
Commonwealth Places Windfall Tax (Imposition) Bill 1998, the Bill
is designed to protect State revenues from claims for refunds in
relation to certain taxes applied in Commonwealth places. Claims by
various taxpayers to a refund would be expected to flow from the
Allders decision on the basis that the taxes were
constitutionally invalid. The 100% windfall tax will deter refund
claims and protect State revenues.
The purpose of the package of four Bills and the
main features of the regime they establish are set out in more
detail in the Bills Digest for the Commonwealth Places (Mirror
Taxes) Bill 1998.
Background
A detailed 'background' to the package of Bills
designed to respond to the High Court decision in Allders
International Pty Limited v Commissioner of State Revenue
(Victoria) is provided in the Bills Digest for the
Commonwealth Places (Mirror Taxes) Bill 1998.
Main
Provisions
Clause 6 describes how a
taxpayer would become liable for the Commonwealth Places Windfall
Tax. The Allders decision means that some taxpayers are
entitled to a refund for State tax paid in relation to a
Commonwealth place, on the grounds of constitutional invalidity.
Where the tax was paid before 6 October 1997, and the taxpayer
claims a refund or one is ordered by a court, the amount payable to
the taxpayer is defined as 'a taxable amount'. A taxable amount
relates only to that part of a refund attributable to the
constitutional invalidity of the tax under section 52(i) -
refundable amounts for other reasons are not included in the
definition of a taxable amount.
Clause 7 imposes on the
relevant taxpayer a liability to pay windfall tax on the taxable
amount.
Thus a taxpayer who seeks to recover amounts
paid before 6 October 1997 under any of the four named State taxes
will be subjected to a 100% windfall tax on those amounts.
The method of collecting windfall tax set out in
clause 8 will ensure taxpayers will not receive
refunds of the four State taxes otherwise payable due to the
Allders decision. That is because the clause requires the
State first to deduct windfall tax before repaying the taxable
amount. As the windfall tax will be levied at 100%, there will be
no repayment. The State must notify the taxpayer that the windfall
tax 'deduction' has been made. Constitutionally the withheld
windfall tax must be forwarded by the State to the Commonwealth
before the same amount comes back to the State by way of
Commonwealth appropriation (subclause 8(3) and
clause 12).
The amount withheld by the State gives rise to a
tax credit for the same amount in the taxpayer as against the
Commonwealth. This credit will usually be nullified when applied
against the taxpayer's liability for Commonwealth windfall tax, but
if there is any residual credit it will be refunded to the taxpayer
and deducted from the amount the Commonwealth returns to the State
(subclause 9(4) and clause 12).
The Bill also makes provision for annual reports
by the Tax Commissioner (clause 10), co-operative
arrangements between the Tax Commissioner and State officials
(clause 11), and the making of Regulations under
the Bill (clause 13).
Endnotes
-
- (1996) 186 CLR 630
Sean Brennan
11 March 1998
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 1997
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Published by the Department of the Parliamentary Library,
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