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Bills Digest No. 83   1998-99
A New Tax System (Goods and Services Tax Imposition - Customs) Bill 1998

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.

Passage History

Date Introduced: 2 December 1998

House: House of Representatives

Portfolio: Treasury

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.

1.0 Imposition

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.

2.0 Rate

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.

1.0 The 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.

1. Lumb & Moens, The Constitution of the Commonwealth of Australia, Annotated, Fifth Edition, Butterworths, 1995, p 438.
2. A New Tax System (Goods and Services Tax) Act 1998
   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); and
   (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 covered).
3. A New Tax System (Goods and Services Tax) Act 1998
   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.
4. 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.
5. 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.
6. The Constitution, section 6
7. South Australia v Commonwealth (1992) 174 CLR235, 248.
8. Queensland v Commonwealth (1987) 162 74, 98.

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ISSN 1328-8091
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