Bills Digest No. 152   1997-98 Commonwealth Places Windfall Tax (Collection) Bill 1998


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WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the 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

  1. (1996) 186 CLR 630

Contact Officer and Copyright Details

Sean Brennan
11 March 1998
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.



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