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
Contact Officer & Copyright Details
Date Introduced: 2 December 1998
House: House of Representatives
Commencement: 1 July 2000
To impose the tax
that is payable under the GST law, insofar as it is a duty of
customs, within the meaning of the A New Tax System (Goods and
Services Tax) Act 1998.
1.0 Exclusive Power Over Customs,
Excise and Bounties
Section 90 of the Constitution
prohibits the States from levying customs duties and excise duties.
The expression of section 90 also prevents self-governing
Territories from imposing customs and excise duties. By virtue of
section 90, only the Federal Parliament can impose such taxes.
'A customs duty is a tax imposed on goods
imported into, or exported out of, Australia. In contrast an excise
duty is a tax which is imposed on goods which are already in
circulation in Australia.'(1)
2.0 Further Background
For additional background information please
refer to the Bills Digest for the A New Tax System (Goods and
Services Tax Imposition-General) Bill 1998.
Subclause 3(1) states that the
tax that is payable under the GST law(2) (within the meaning of the
A New Tax System (Goods and Services Tax) Act 1998) is imposed by
this section under the name of goods and services tax (GST).(3)
Subclause 3(2) imposes the GST
only so far as it is a duty of customs within the meaning of
section 55 of the Constitution. Please refer to the
discussion above at paragraph 3.0 for further information in
relation to this issue.
Clause 4 imposes the rate of
the goods and services tax payable under the A New Tax System
(Goods and Services Tax) Act 1998 at 10 per cent.
3.0 State Property
Clause 5 ensures that the
legislation imposing the GST does not apply to property of any kind
belonging to a State.(4) The Territories are not included within
the ambit of this section. Please refer to 'Concluding Comments'
for further discussion on this topic.
Constitution does not protect the States from a GST on
transactions which affect its property unless the tax can truly be
characterised as a tax on the ownership or holding of property
Section 114 of the Constitution(5) is
one of the few sections in the Constitution defining the
nature of intergovernmental immunities. It prevents the
Commonwealth Parliament from legislating so as to tax property of
any kind belonging to a State. The definition of a 'State' does not
include a Territory.(6)
Judicial decisions appear to have adopted a
narrow interpretation of section 114 so as only to protect the
States against a tax imposed by reason of the ownership or holding
of property. (7)
This approach has led the High Court to decide,
for example, that section 114 did not prevent the Commonwealth from
taxing car and housing fringe benefits provided by the State to its
employees. This is because section 114 'protects the property of a
State from a tax on the ownership or holding of property but it
does not protect the State from a tax on transactions which affect
its property, unless the tax can truly be characterised as a tax on
the ownership or holding of property.'(8)
Thus section 114 does not afford the States with
protection from a GST in relation to every form of transaction to
which a State is a party. It is restricted to prohibiting the
imposition of a goods and services tax where such a tax is
characterised as one on the ownership or holding of property.
2.0 Naming of GST bills
From a practical perspective, the titles of all
GST Bills appear to be unnecessarily lengthy and indeed cumbersome.
The words 'A New Tax System' could be deleted from each title
without affecting the relevance of the title to the particular
piece of legislation. Presumably, the title has been used to make
it easier for the Parliament to identify those Bills which form
part of the GST package. The use of lengthy titles may, however,
cause some problems for practitioners who will be referring to the
legislation in later years.
- Lumb & Moens, The Constitution of the Commonwealth of
Australia, Annotated, Fifth Edition, Butterworths, 1995, p
- A New Tax System (Goods and Services Tax) Act
GST law means:
(a) this Act; and
(b) any Act that imposes GST; and
(c) the A New Tax System (Goods and Services Tax Transition)
Act 1998; and
(d) the Taxation Administration Act 1953, so far as it
relates to any Act covered by paragraphs (a) to (c); and
(e) any other Act, so far as it relates to any Act covered by
paragraphs (a) to (d) (or so much of that Act as is covered);
(f) regulations under any Act, so far as they relate to any Act
covered by paragraphs (a) to (e) (or so much of that Act as is
- A New Tax System (Goods and Services Tax) Act
GST means tax that is payable under the GST law and imposed as
goods and services tax by any of these:
(a) the A New Tax System (Goods and Services Tax
Imposition-General) Act 1998; or
(b) the A New Tax System (Goods and Services Tax
Imposition-Customs) Act 1998; or
(c) the A New Tax System (Goods and Services Tax
Imposition-Excise) Act 1998.
- Property of any kind belonging to a State has the same
meaning as attributed to it by judicial interpretation in respect
of section 114 of the Constitution. It is not actually
defined in section 114.
- Section 114: A State shall not, without the consent of
the Parliament of the Commonwealth, raise or maintain any naval or
military force, or impose any tax on property of any kind belonging
to the Commonwealth, nor shall the Commonwealth impose any tax on
property of any kind belonging to a State.
- The Constitution, section 6
- South Australia v Commonwealth (1992) 174 CLR235, 248.
- Queensland v Commonwealth (1987) 162 74, 98.
Lesley Lang and Simon Lang
21 January 1999
Bills Digest Service
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