IN COURT: Round 1 to the ATO
In Halliday vs. Commonwealth [FCA 950, 14 July 2000], Justice Sundberg of the Federal Court ruled:
"The validity of the GST laws ... depends on whether they are laws with respect to taxation within s.51(ii). If they are, the fact that they may impose "civil conscription'' ... is irrelevant."
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In other word, contrary to the opinion of Justice Murphy, the prohibition of civil conscription does not apply outside s.51(xxiiiA) of the Constitution. Justice Sundberg continued:
"The attack is limited to the withholding tax provisions in the PAYG Act. ... The power to make laws with respect to taxation is not restricted to laws dealing with the imposition and collection of tax. It extends to measures that
will enable the system of taxation to function effectively. It extends to measures intended to prevent the evasion of taxation ... The withholding provisions are designed to prevent the avoidance of tax by a payee who does not quote an ABN. In my
view the provisions fall within the core of the subject matter of s.51(ii). ... If they do not, they are provisions that fall within the implied incidental power, as matters which are necessary for the reasonable fulfilment of the legislative
power. ... The claim that the GST laws are invalid because they impose civil conscription has no prospect of success. Because they are valid laws under s.51(ii), it is not necessary to decide whether they do impose civil conscription."
Indemnity costs were awarded against the applicants.
Concerning the numerous specific arguments in this article that are not addressed in the judgment, I can only surmise that those arguments were not put before the Court. In so far as the judgment conflicts with the general direction of
this article, it is of limited scope. It addresses the issues of "matters incidental'' and "civil conscription'' only, and in so doing does not address aspects of the new tax system other than the withholding provisions. It does not
consider "just terms'', slavery under international conventions, or the policy arguments in favour of simplification. Thus, even if the judgment is not overturned by any subsequent decision of the High Court, it does not follow that the new
tax system is valid.
The author would like it known that he is not affiliated with the Institute of Taxation Research (ITR) and that the above article is not legal advice. Readers should obtain independent legal advice before acting on any of the opinions expressed above.
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