Association of Mining and Exploration Companies Inc v Commissioner of State Revenue
[2016] WASCA 131
•29 JULY 2016
ASSOCIATION OF MINING AND EXPLORATION COMPANIES INC -v- COMMISSIONER OF STATE REVENUE [2016] WASCA 131
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2016] WASCA 131 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:120/2015 | 10 JUNE 2016 | |
| Coram: | BUSS P NEWNES JA MITCHELL JA | 29/07/16 | |
| 20 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed | ||
| B | |||
| PDF Version |
| Parties: | ASSOCIATION OF MINING AND EXPLORATION COMPANIES INC COMMISSIONER OF STATE REVENUE |
Catchwords: | Appeal from State Administrative Tribunal Exemption for charitable body or organisation from liability to payroll tax Commissioner's discretion to grant exemption and specify day on which it comes into operation Where appellant sought exemption and refund for previous five years Where parties agreed that appellant had been a charitable body at all material times Whether Tribunal erred in treating charitable status as an irrelevant consideration Whether Tribunal erred in treating delay in bringing application for exemption as a relevant consideration Whether Tribunal erred in identifying a 'starting point' for the exercise of its discretion Whether Tribunal denied appellant natural justice Whether Tribunal ought to have applied Commissioner's policy |
Legislation: | Pay-roll Tax Assessment Act 2002 (WA), s 40, s 41 Taxation Administration Act 2003 (WA), s 7, s 43A |
Case References: | Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2012] WASAT 146; (2012) 89 ATR 797 Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51 Commissioner of State Revenue v Oz Minerals Ltd [2013] WASCA 239; (2013) 46 WAR 156 Cronulla Sutherland Leagues Club Ltd v Commissioner of Taxation (1990) 23 FCR 82 Ethnic Interpreters and Translators Pty Ltd v Sabri-Matanagh [2015] WASCA 186 Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : ASSOCIATION OF MINING AND EXPLORATION COMPANIES INC -v- COMMISSIONER OF STATE REVENUE [2016] WASCA 131 CORAM : BUSS P
- NEWNES JA
MITCHELL JA
- Appellant
AND
COMMISSIONER OF STATE REVENUE
Respondent
ON APPEAL FROM:
Jurisdiction : STATE ADMINISTRATIVE TRIBUNAL OF WESTERN AUSTRALIA
Coram : JUDGE T SHARP (DEPUTY PRESIDENT)
Citation : ASSOCIATION OF MINING AND EXPLORATION COMPANIES INC and COMMISSIONER OF STATE REVENUE [2015] WASAT 74
File No : CC 46 of 2015
Catchwords:
Appeal from State Administrative Tribunal - Exemption for charitable body or organisation from liability to payroll tax - Commissioner's discretion to grant exemption and specify day on which it comes into operation - Where appellant sought exemption and refund for previous five years - Where parties agreed that appellant had been a charitable body at all material times - Whether Tribunal erred in treating charitable status as an irrelevant consideration - Whether Tribunal erred in treating delay in bringing application for exemption as a relevant consideration - Whether Tribunal erred in identifying a 'starting point' for the exercise of its discretion - Whether Tribunal denied appellant natural justice - Whether Tribunal ought to have applied Commissioner's policy
Legislation:
Pay-roll Tax Assessment Act 2002 (WA), s 40, s 41
Taxation Administration Act 2003 (WA), s 7, s 43A
Result:
Appeal allowed
Category: B
Representation:
Counsel:
Appellant : Ms J J Batrouney QC & Ms A Lee
Respondent : Mr A J Sefton & Ms R Panetta
Solicitors:
Appellant : PricewaterhouseCoopers
Respondent : State Solicitor's Office
Case(s) referred to in judgment(s):
Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2012] WASAT 146; (2012) 89 ATR 797
Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51
Commissioner of State Revenue v Oz Minerals Ltd [2013] WASCA 239; (2013) 46 WAR 156
Cronulla Sutherland Leagues Club Ltd v Commissioner of Taxation (1990) 23 FCR 82
Ethnic Interpreters and Translators Pty Ltd v Sabri-Matanagh [2015] WASCA 186
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24
Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492
- REASONS OF THE COURT:
Summary
1 On 20 December 2012, the appellant (AMEC) applied for an exemption from liability for pay-roll tax on the basis that it was a charitable body or organisation. It is common ground that AMEC has been a charitable body or organisation for the purposes of the Pay-roll Tax Assessment Act 2002 (WA)1 (Act) since at least 1 July 2007. On 6 September 2013, the respondent (Commissioner) gave notice under s 41(2) of the Act exempting AMEC from liability to pay-roll tax. The Commissioner's notice specified 1 July 2012 as the day on which the exemption came into operation under s 41(4) of the Act.
2 On 5 November 2013, AMEC objected to the Commissioner's decision to specify 1 July 2012, rather than 1 July 2007, as the day the exemption came into operation. AMEC sought to have the exemption operate from 1 July 2007, which was the beginning of the assessment year five years prior to the date on which the exemption application was made. On 18 November 2014, the Commissioner disallowed the objection. On 20 April 2015, the State Administrative Tribunal (Tribunal) dismissed AMEC's application for a review of the Commissioner's decision to disallow its objection. AMEC appeals to this court against the Tribunal's decision.
3 The principal issue raised by the grounds of appeal concerns the proper construction of s 41(4) of the Act, which provided:
The exemption comes into operation on the day specified in the notice, which may be the day on which the notice is given, or an earlier or later day.
4 AMEC contends that the Commissioner, or Tribunal standing in her shoes, was required to specify the operative date as 1 July 2007, because AMEC had been charitable throughout that period. The Commissioner contends that the power to specify a date before the exemption application was made is not properly exercisable solely because AMEC was charitable before that time.
5 We reject both parties' submissions as to the construction of s 41(4) of the Act. In our view, s 41(4) of the Act confers a broad discretionary power which neither required the Commissioner to specify 1 July 2007, nor prohibited the Commissioner from specifying that day, as the date on which the exemption came into operation.
6 However, we accept AMEC's submissions that the Tribunal erred in law by misapprehending the nature and scope of the statutory discretion which the Commissioner, and the Tribunal standing in her shoes, was exercising. The Tribunal's decision to dismiss AMEC's review application should be set aside on that ground. The matter should be sent back to the Tribunal for reconsideration in accordance with the law as explained in these reasons.
Grounds of appeal and notice of contention
7 AMEC appeals against the Tribunal's decision under s 43A of the Taxation Administration Act 2003 (WA) (Administration Act). Section 43A provides for an appeal without leave 'on a question of law, of fact, or mixed law and fact'.2 AMEC alleges that the Tribunal erred in law by finding that:
1. its charitable status prior to making the exemption application was an irrelevant consideration;
2. its reasons for not applying for an exemption sooner were a relevant consideration; and
3. the starting point for the date specified under s 41(4) of the Act is the day upon which the exemption is granted (or, for ease of administration, the first day of the financial year upon which the exemption is granted), and that circumstances were required to dictate a different date.
8 AMEC also alleges that the Tribunal erred in law by failing to provide AMEC with a reasonable opportunity to present its case with regards to its reasons for not applying for an exemption sooner.
9 The Commissioner submits that these grounds are not established. The Commissioner also contends that the Tribunal ought to have applied a published policy of the Commissioner. The policy is Commissioner's Practice PT 3.0, to the effect that exemptions for registered charitable bodies will generally come into operation on 1 July in the assessment year in which the application for exemption is received.
Statutory provisions
10 The Act, read with the Administration Act, provides for the assessment and collection of tax on wages paid by employers. The Act distinguishes between 'group members', 'local non-group employers' and 'interstate non-group employers'. As AMEC was a local non-group employer at all material times, it is convenient to focus on the provisions of the Act dealing with that category of employer.
11 A local non-group employer who pays or is liable to pay 'WA taxable wages' is liable to pay any pay-roll tax payable on the wages.3 At the relevant times, tax was payable at the rate of 5.5% of the amount by which WA taxable wages paid or payable by the employer exceeded the annual threshold of $750,000.4 'WA taxable wages' are wages, other than exempt wages, that are taxable in this jurisdiction.5 Wages are 'taxable in this jurisdiction' if they are paid or payable in relation to services performed by a person wholly in this jurisdiction or otherwise have a specified connection to Western Australia.6
12 A non-group employer which is not registered under the Act must apply to the Commissioner for registration if it pays or is liable to pay WA taxable wages during a month in excess of the monthly threshold amount of $62,500.7 The Commissioner must then register the employer if it appears to her that the employer is, or is likely to become, liable to pay pay-roll tax.8 Unless exempt from the requirement, an employer who is registered or who is required to apply for registration must lodge a return for each month specifying the amount of WA taxable wages paid or payable by the employer during the month.9 The determination of the employer's pay-roll tax liability may be by way of self-assessment in the return or an official assessment made by the Commissioner.10
13 The Administration Act provides for the Commissioner to make a reassessment on the application of a taxpayer made within five years after the date of the original assessment.11 The Commissioner must refund tax to a taxpayer if, as a result of a reassessment, it appears that an overpayment of tax has been made.12 However, an application for a refund of pay-roll tax must be made within five years of the date when the overpayment occurred.13
14 In this context, s 40 of the Act defines wages which are exempt from pay-roll tax and which are not, on that account, 'WA taxable wages' for the purposes of the Act. Exemptions are defined by reference to the character of the person who pays the wages, the purpose for which wages are paid or a combination of the two. Wages paid or payable by some kinds of employer are automatically exempt, such as wages paid by a religious institution for doing the religious work of the institution.14 The exemption on which AMEC relies is different, requiring a decision of the Commissioner under s 41 of the Act. Section 40(2)(n) of the Act provides that wages are exempt from pay-roll tax if they are paid or payable:
by a charitable body or organisation exempted under section 41 for doing work of the kind ordinarily performed in connection with a charitable purpose for which the body or organisation is established or carried on[.]
15 Section 41 of the Act, which is the critical provision in this case, provided at the relevant time:
(1) A charitable body or organisation may apply to the Commissioner for exemption from liability to pay-roll tax.
(2) The Commissioner may, by giving notice to the charitable body or organisation, exempt it from liability to pay-roll tax.
(3) The exemption is subject to any conditions specified in the notice.
(4) The exemption comes into operation on the day specified in the notice, which may be the day on which the notice is given, or an earlier or later day.
(6) The exemption continues in force until it is revoked.
(7) The Commissioner may amend or revoke the exemption and any condition to which it is subject, by giving further notice to the charitable body or organisation.
16 Therefore, the exemption of wages paid by AMEC from pay-roll tax depended on the existence of an operative exemption at the time when the wages were paid.
17 The Commissioner had a statutory discretion to specify the day on which an exemption comes into operation, which may be earlier or later than the day on which notice of the exemption is given. AMEC alleges that the Tribunal misapprehended the nature of that discretion.
The Tribunal's decision
18 The background to the Tribunal's decision was the earlier decision of a differently constituted Tribunal in Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue (CCI 2012 decision).15 The Tribunal in the CCI 2012 decision decided that CCI was a charitable body or organisation and granted CCI an exemption under s 41 of the Act. In determining the period of the exemption, the Tribunal said:
If, as has occurred in this case, the finding as to charitable purposes has resulted from an analysis of materials demonstrating the activities and purposes of CCI over the relevant period, there is no reason to deprive CCI of the entitlement to an exemption for the whole period in respect of which the exemption [was] sought [106].
19 In the present case, AMEC argued that the Tribunal should determine its application by following the CCI 2012 decision and deciding that the exemption should commence from 1 July 2007. The Tribunal as presently constituted referred to the CCI 2012 decision and said that:
I am sure that his Honour had his reasons for coming to this conclusion, but, with respect, I am unable to discern from the CCI 2012 decision what those reasons were. I therefore do not consider that the CCI 2012 decision is authority for the proposition that any exemption granted under s 41(2) of the PT Act should be made retrospective for five years [81].
20 The Tribunal noted that it was open to AMEC to apply for an exemption at any time, and that it had not provided the Tribunal with any reasons why it did not do so sooner [82]. It noted AMEC's submission that the Commissioner ought to have considered AMEC had met the requirement of being a charitable organisation or body since at least 1 July 2007, and that the correct and preferable decision was to specify that as the relevant date [83]. The Tribunal said:
However, until AMEC made its application under s 41(1) of the PT Act and the exemption was granted, it was properly liable for pay-roll tax. Unlike, for example, a public benevolent institution which is exempt from liability to pay-roll tax by virtue of s 40 of the PT Act, a charitable body or organisation needs to be expressly exempted from liability under s 41. Until the exemption is granted, the body concerned is not exempt. Accordingly, I consider that the charitable status of AMEC prior to its making of an application for exemption is irrelevant to this issue. Most, if not all, entities who are given that exemption would be able to make that argument.If the intention of the Parliament was to apply the exemption from the date the entity could show that it was charitable, the PT Act would have so provided.
As I have mentioned previously, the Commissioner's discretion as to the date upon which the exemption comes into operation is unfettered. The PT Act says that the exemption comes into operation either on the day when the exemption notice is given or on an earlier or later date. In our opinion, therefore, the appropriate starting point is that the exemption will come into force on the date upon which it is granted (or, for ease of administration, the first day of the financial year upon which the exemption is granted). At that point, it is then necessary to consider whether there are circumstances to dictate that another date is more appropriate.
It is unnecessary in this case to consider what those circumstances might be, simply because AMEC has not specified what it considers those circumstances are. AMEC's argument is entirely based on what it regards as the precedent set by the CCI 2012 decision and the fact that AMEC has met the requirement of being a charitable body or organisation since at least 1 July 2007. I have already dealt with those two points.
Accordingly, it is my conclusion that the date fixed by the Commissioner, 1 July 2012, is the correct and preferable decision [84] - [87]. (citation omitted)
Proper construction of s 41 of the Act
21 The premise for AMEC's grounds of appeal is that the purpose of s 41 of the Act is to afford concessional treatment to charitable bodies and organisations to which they are entitled, no matter when that entitlement is asserted by them. AMEC submits that the Commissioner must grant an exemption on the application of a charitable body or organisation, and must specify the operative date as the day five years before the date of the exemption application if the entity has been charitable throughout the period.
22 There are a number of reasons for rejecting this submission.16
Structure of s 40 of the Act
23 AMEC's submission is inconsistent with the structure of s 40 of the Act. Section 40 distinguishes between those bodies which are exempt while they bear a defined character, and charitable bodies and organisations which must be exempted under s 41 in order to avoid liability to pay-roll tax: s 40(2)(n). If the Act left the Commissioner no residual discretion to refuse an application for exemption in relation to a period when a body or organisation held a charitable status, there would be no point in requiring the application for and grant of an exemption. That result could readily have been achieved by making the provision for exemption automatic, as is accorded to other bodies, such as religious institutions, public benevolent institutions, hospitals and schools. The different treatment of charitable bodies and organisations indicates that something more than the continuous existence of that status during a period of time is required before the Commissioner is obliged to grant an exemption in relation to that period.
24 AMEC contends that the requirement for the grant of an exemption accommodates the fact that a body may gain and lose charitable status, depending on its activities over a period of time.17 However, that potential for change would be accommodated by provision that only wages paid by a charitable body or organisation are exempt. Wages paid at a time when the body or organisation could not be characterised as charitable would then fall outside the exemption. In our view, the requirement for a charitable body or organisation to be exempted under s 41 of the Act before wages paid by the body or organisation are exempt from pay-roll tax is not explained by the potential for a body or organisation to lose or gain charitable status over time.
Structure of s 41 of the Act
25 AMEC's submission is inconsistent with the structure of s 41 so far as it contemplates an exemption notice coming into operation at a date after the exemption application is made, including after the Commissioner gives a notice of exemption. Section 41(1) requires a body or organisation to be charitable in order to apply for an exemption from liability to pay-roll tax. A body or organisation must be charitable at the date of the exemption application in order for there to be a valid application which enlivens the Commissioner's power to give an exemption notice. Section 41(4) expressly contemplates that an exemption may come into operation on or after the date when the exemption notice is given, which will necessarily be after the exemption application is made. In that manner, s 41 provides for an exemption to come into operation after the date on which the applicant must have been charitable. That is inconsistent with a charitable body or organisation being entitled to an exemption so long as it has charitable status.
26 AMEC seeks to explain the express provision for an exemption to operate after the application date as accommodating a charitable body which only anticipates paying WA taxable wages above the tax threshold at a future time. However, a body or organisation that does not pay WA taxable wages above the relevant threshold does not require an exemption in order to avoid pay-roll tax liability. There is nothing to prevent a charitable body or organisation from seeking and obtaining an exemption which operates before it pays WA taxable wages above the tax threshold.
Conditions, amendment and revocation
27 The Commissioner's power to subject an exemption to conditions specified in the exemption notice indicates that a body or organisation does not have an unqualified right to the grant of an exemption merely because of its charitable status.
28 Further, s 41(7) of the Act gives the Commissioner power to amend or revoke an exemption or the conditions to which it is subject by 'giving further notice to the charitable body or institution'. This indicates that an exemption may be revoked (for example, due to a failure to comply with conditions) even when the body or organisation maintains its charitable status.
Language used in s 41(4) of the Act
29 If the Commissioner was required to specify the date on which the body or organisation acquired its charitable status as the date from which an exemption operated, it would have been simple for s 41(4) to say so expressly. AMEC's submission is inconsistent with the language of s 41(4) of the Act which confers a discretionary power in terms which do not expressly confine the manner in which the discretion is to be exercised.
Character of the power
30 AMEC's submissions conflate the provisions of the Act which define the liability to pay tax with the provisions of the Administration Act which provide for the reassessment of tax payable and the refund of overpaid tax. The five-year limitation is applied to applications for a reassessment or a rebate, and operates only where there has been an overassessment or overpayment of tax. The grant of an exemption notice under s 41 of the Act which operates retrospectively may result in an application for reassessment and refund. However, the references to the five-year period do not qualify the power to specify the date from which an exemption operates.
31 That s 41 of the Act operates to define the liability of a body or organisation to pay-roll tax distinguishes it from provisions of the kind considered in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd.18Royal Insurance was concerned with a section which provided that the Victorian Commissioner 'may refund to the company' amounts of stamp duty found to be overpaid. The majority of the High Court construed the provision as denying the Victorian Commissioner a residual discretion to refrain from making a refund once a finding of overpayment had been made and there was a legal liability to refund that amount.19 The relevant provision was in a different form to s 41 of the Act, and operated only where the Victorian Commissioner concluded that there had been an overpayment of tax. In the present case the power conferred by s 41 of the Act does not operate by reference to an overpayment, although the manner in which the power is exercised may affect whether there has been an overpayment.
Legislative purpose and history
32 The purpose of s 41(4), apparent from its legislative history, is inconsistent with AMEC's submissions.
33 Provision for exemptions for charitable bodies and organisations was introduced into the Pay-roll Tax Assessment Act 1971 (WA) (1971 Act) in 1984.20 At that time, the exemption was granted by the Minister and took effect on the gazettal of a notice. Provision for the grant of an exemption by the Commissioner's notice, with power to specify a date (whether before or after the giving of the notice) was introduced in 1997.21 The explanatory memorandum to the amending Bill stated:22
The lack of a mechanism to provide an exemption retrospectively has caused problems in the past for charitable institutions which have paid wages in excess of the threshold but have failed to register and pay pay-roll tax.
In such circumstances, the Commissioner is required to assess the institution's liability up to the date of exemption which invariably leads to claims for ex gratia payments by charitable institutions which are unable to meet their obligations.
These amendments propose that any exemption should apply from a date specified by the Commissioner.
However, to prevent claims for refunds by charitable institutions which may have been registered and paying pay-roll tax for some time, it is proposed that there should be no right of objection to any decision by the Commissioner not to apply an exemption retrospectively.
These changes will remove the need for Act of Grace payments to be made where a charitable body has incurred a liability prior to making application for the exemption.
34 The 1997 amendment also provided that an employer had no right of objection with respect to a decision of the Commissioner that an exemption would not come into operation from a day prior to the giving of the notice.23 The explanatory memorandum states that this provision was necessary 'to protect the revenue from substantial refund claims'.24
35 These provisions of the 1971 Act were reflected in the Act as enacted. However, the supposed protection of the revenue from substantial refund claims, said to follow from making the decision exempt from administrative review, was lost in 1994 when s 41(5) of the Act was repealed.25 Section 41(5) had provided that the Commissioner's decision as to the day on which the exemption comes into operation was non-reviewable.
36 Despite the repeal of s 41(5) of the Act, so that the decision as to the operative date of an exemption notice is now reviewable in the Tribunal, the above legislative history continues, relevantly to the present case, to inform aspects of the discretionary nature and permissible scope of the power conferred by s 41(4) of the Act. The circumstances in which that provision was first enacted indicate, consistently with the statutory text that is applicable in the present case, that it was not objectively intended to require the Commissioner to specify a date five years prior to the application for exemption, subject only to a requirement that the body or organisation was charitable throughout the relevant time.
AMEC's construction of s 41 of the Act is rejected
37 For these reasons, we do not accept AMEC's submission as to the proper construction of s 41(4) of the Act.
Commissioner's construction of s 41 of the Act is rejected
38 On the other hand, we also do not accept the Commissioner's submission that the discretion in s 41(4) of the Act is subject to an implied limitation as to its scope:
such that it is not properly exercisable solely because a charitable organisation or body granted an exemption may also have been a charitable organisation or body prior to the date it applied to be granted an exemption.
39 We can see no warrant in the language of s 41 of the Act or its context for precluding the Commissioner from specifying a date prior to the date of the exemption notice by reference only to the circumstance that the body or organisation was charitable from an earlier date. The Commissioner's submissions about the structure and history of the provision show that she is not obliged to specify the earliest date from which the body or organisation held charitable status. However, those submissions do not lead to the conclusion that the Commissioner is implicitly precluded from doing so by reference only to the period during which the body or organisation maintained its charitable status.
Nature of the discretion
40 In our view, s 41(4) of the Act confers a broad discretionary power which neither required the Commissioner to specify the first day on which AMEC acquired its charitable status, nor prohibited the Commissioner from specifying that day as the date on which the exemption comes into operation.
41 The section does not specify the matters which the Commissioner must or must not take into account. Those matters are to be inferred from the subject matter, scope and purpose of the Act. The absence of any positive indications of the considerations on which the exercise of the discretion depends suggests that the matters to which the Commissioner may have regard are generally unconfined. However, the Commissioner may not take account of considerations which, having regard to the subject matter, scope and purpose of the Act, are definitely extraneous to any objects the legislature could have had in view.26
42 Given the subject matter of the legislation, the time or times at which the body or organisation could be properly characterised as charitable is an implicit mandatory relevant consideration which will necessarily inform the exercise of the discretionary power. However other matters, such as the reasons for the delay in applying for an exemption, the impact which the decision will have on the charitable body or organisation concerned and the orderly and proper administration of the Act are considerations to which the Commissioner may have regard in deciding how the discretion should be exercised.
43 In our view, the Act did not preclude the Tribunal from specifying 1 July 2012 as the date on which the exemption came into operation. Nor did the Act preclude the Tribunal from following the approach taken in the CCI 2012 decision and specifying a day five years before the application was made. The Act did not mandate a date from which the exemption must operate in the circumstances of the present case, but left the selection of the date to the proper exercise of the Commissioner or Tribunal's discretion.
44 Against the background of these conclusions as to the proper construction of the Act, it is now appropriate to turn to AMEC's challenges to the manner in which the Tribunal exercised its discretion in the present case.
Ground 1: alleged error in treating AMEC's charitable status as an irrelevant consideration
45 AMEC relies on the following statement in the Tribunal's reasons as indicating that the Tribunal erroneously regarded its charitable status as an irrelevant consideration:
Accordingly, I consider that the charitable status of AMEC prior to its making of an application for exemption is irrelevant to this issue. Most, if not all, entities who are given that exemption would be able to make that argument [84].
46 Taken literally, this statement is incorrect. AMEC's charitable status prior to the exemption application or notice did not demand the specification of an earlier date in the notice, but it was not irrelevant to the issue. To the contrary, in our view it was a mandatory relevant consideration. Such a misconstruction of s 41 of the Act would be an error of law which would justify interference by this court.
47 The Commissioner submits that, understood in its context, the Tribunal's reference to the charitable status being irrelevant was a reference to the charitable status not being 'a sufficient basis to warrant the exercise of the discretion'. The Commissioner says that the context in which the statement is made indicates that the Tribunal was making a comment about the proper construction of s 41(4) of the Act. In that context, a conclusion that the charitable status of the organisation was not sufficient to warrant the exercise of the discretion would seem to be a statement about the circumstances in which the discretion could be exercised rather than a statement about the circumstances in which the discretion should be exercised. That is, on the Commissioner's construction of the Tribunal's reasons, the Tribunal was adopting her submissions as to the implicit limitations in s 41(4) of the Act which we have rejected.
48 On either AMEC's or the Commissioner's construction of the Tribunal's reasons, the Tribunal misapprehended the nature and limits of its discretionary power under s 41(4) of the Act. No other construction is reasonably open. That error of principle constitutes an error of law which can justify setting aside the Tribunal's decision.
49 Ground 1 is established.
Ground 2: alleged error in treating AMEC's reasons for delay as a relevant consideration
50 It follows from the above discussion that we do not regard the reasons why AMEC failed to apply sooner to be a consideration which the Tribunal was prohibited from taking into account.
51 AMEC referred to s 36(5)(b) of the Administration Act, which requires an applicant for an extension of time for lodging an objection to specify the grounds on which the applicant seeks an extension, and decisions relating to similar provisions under other legislation. These references do not materially assist in the task of construing s 41(4) of the Act.
52 Ground 2 is not made out.
Ground 3: alleged error in identifying the 'appropriate starting point'
53 Ground 3 alleges that the Tribunal erred in law when it said:
The PT Act says that the exemption comes into operation either on the day when the exemption notice is given or on an earlier or later date. In my opinion, therefore, the appropriate starting point is that the exemption will come into force on the date upon which it is granted (or, for ease of administration, the first day of the financial year upon which the exemption is granted). At that point, it is then necessary to consider whether there are circumstances to dictate that another date is more appropriate [85].
54 Where a statute confers a broad discretion it is usually open to the administrator to formulate a policy as to how the discretion is generally to be exercised in certain categories of cases. A policy must not be inconsistent with the legislation conferring the discretion. Further, any policy must not be inflexibly applied. The administrator must always be prepared to consider submissions as to whether the policy is appropriate, and must consider whether it should be applied to the circumstances of the particular case which he or she is required to decide. However, within these constraints, an administrator may adopt such a policy, which will promote consistency in the administration of the legislation.
55 We do not see any reason why the Commissioner and Tribunal cannot make a policy decision which, subject to the above matters, identifies the usual manner in which, in specified circumstances, the discretion to fix a day on which an exemption comes into operation will be exercised. However, it does not appear from the Tribunal's reasons that this was the task which the Tribunal was undertaking.
56 The only matter to which the Tribunal referred as informing its conclusion was the order in which the possible commencement dates were referred to by s 41(4) of the Act. From this, the Tribunal reasoned that 'therefore' the appropriate starting point is the date on which the exemption was granted. The Tribunal reached its conclusion as to the 'appropriate starting point' only by reference to the terms of s 41(4) of the Act, which refers to 'the day on which the notice is given' before the alternative of 'an earlier or later day'.
57 That is, we read this passage of the Tribunal's reasons as indicating its view that s 41(4) of the Act provides for the 'appropriate starting point', or at least guides the Tribunal's determination of the appropriate starting point. In taking that approach, the Tribunal was in error. We cannot see anything in s 41(4) of the Act which suggests an appropriate starting point. In drawing its conclusion as to the appropriate starting point by reference only to the terms of s 41(4) of the Act, the Tribunal has misconstrued that provision.
58 Ground 3 is established.
Ground 4: alleged denial of natural justice
59 AMEC contends that the reasons it did not apply for an exemption sooner were not in issue between the parties. It notes that, during the hearing, the Tribunal 'minimised the issue' when counsel was unable to indicate why the exemption application was not made sooner, by saying 'it doesn't matter' and 'it's a small point' (ts 94 - 95). AMEC says that the Tribunal then dismissed the exemption application on the basis that AMEC did not provide any reasons for not applying sooner. AMEC contends that, by conducting the proceedings in this manner, the Tribunal failed to afford it natural justice by failing to afford it a reasonable opportunity to present its case as to why it did not apply sooner.
60 We do not accept that the Tribunal dismissed the exemption application because AMEC did not provide any reasons for not applying sooner. Rather, the Tribunal was merely noting that AMEC's case was entirely based on what it regarded as the precedent set by the CCI 2012 decision and the fact that AMEC was properly characterised as a charitable body or organisation since at least 1 July 2007. AMEC did not advance any particular reason why it did not apply for an exemption sooner, or any other matter, as providing grounds for exercising the discretion conferred by s 41(4) of the Act in its favour. The Tribunal's reasons merely noted AMEC's approach to the case.
61 Therefore, ground 4 is not established.
Notice of contention
62 Section 127 of the Administration Act provides that the Commissioner is to publish 'all existing practices relating to the assessment of tax' and 'cannot establish or direct a practice to be observed unless the Commissioner first publishes the practice'.
63 The Commissioner says that, with effect from 1 July 2012, the Commissioner published Commissioner's Practice PT 3.0, which describes the Commissioner's policy in relation to the exercise of the discretion conferred by s 41(4) of the Act. The policy indicates that the commencement date that will generally be applied to an exemption where a charitable body or organisation is registered under the Act will be 1 July in the assessment year in which the exemption application is received.
64 The Commissioner's notice of contention is to the effect that the Tribunal's decision should be upheld on the ground that Commissioner's Practice PT 3.0 'ought to have been applied by the Tribunal'. As the point was explained by counsel for the Commissioner, it depends on the court accepting the Commissioner's submissions as to the proper construction of s 41(4) of the Act. As we have rejected that construction, the point raised in the notice of contention does not justify dismissing the appeal even though one or more of AMEC's grounds of appeal is established.
Reconsideration of decision
65 For the above reasons, the Tribunal erred in law by misapprehending the nature and scope of the statutory discretion it was exercising. It follows that the Tribunal's decision to dismiss AMEC's review application must be set aside. The Tribunal is the body tasked with making the 'correct and preferable decision' as to the date on which AMEC's exemption should come into operation.27 In circumstances where the Act does not mandate any particular outcome, the most appropriate course is to send the matter back to the Tribunal for reconsideration in accordance with the law as explained in these reasons.28
66 Given that we have construed s 41 of the Act as conferring a broader discretion than was apprehended by either party, we would not constrain the Tribunal from receiving further evidence.29
Orders
67 For the above reasons, we would make the following orders:
1. The appeal be allowed.
2. The Tribunal's order of 2 July 2015, dismissing AMEC's review application, be set aside.
3. The matter be sent back to the Tribunal for reconsideration in accordance with the law as explained in these reasons.
4. On reconsideration, the Tribunal may hear such further evidence as it thinks fit to receive in relation to the date on which AMEC's exemption under s 41 of the Act should come into operation.
68 We would hear from the parties as to the costs of the appeal and consequential orders, including as to whether the Deputy President who made the original decision should constitute the Tribunal on reconsideration of the matter.
1 Section 41 and associated provisions of the Act were significantly amended by the Taxation Legislation Amendment Act (No. 2) 2015 (WA), which commenced operation on 10 March 2015. It is common ground between the parties that this appeal is to be determined by reference to the provisions of the Act as they stood prior to the amendment.
2 As to the nature of an appeal under s 43A of the Administration Act, see Commissioner of State Revenue v Oz Minerals Ltd [2013] WASCA 239; (2013) 46 WAR 156 [89].
3 Section 7(1) of the Act.
4 Section 5(2) of the Pay-roll Tax Act 2002 (WA) read with s 8(1) and s 10(1) of the Act.
5 Section 5(2) of the Act.
6 Section 6A of the Act.
7 Section 8(2) and s 24(1) of the Act.
8 Section 25(1) of the Act.
9 Section 26(1) of the Act.
10 Section 13 - s 15 of the Administration Act.
11 Section 16(2)(b) and s 17(1) of the Administration Act.
12 Section 54(1)(a) of the Administration Act.
13 Section 54(4)(b) of the Administration Act.
14 Section 40(2)(b) of the Act.
15Chamber of Commerce and Industry of Western Australia (Inc) and Commissioner of State Revenue [2012] WASAT 146; (2012) 89 ATR 797.
16 As to the applicable principles of statutory interpretation, see Ethnic Interpreters and Translators Pty Ltd v Sabri-Matanagh [2015] WASCA 186 [63] - [65].
17 Citing Cronulla Sutherland Leagues Club Ltd v Commissioner of Taxation (1990) 23 FCR 82, 95 - 96, 122.
18Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51.
19Royal Insurance (87 -88). The same outcome is now achieved in Western Australia by the mandatory language of s 54(1) of the Administration Act.
20 Section 4 of the Pay-roll Tax Assessment Amendment Act 1984 (WA), amending s 10 of the 1971 Act.
21 Section 13 of the Revenue Laws Amendment Assessment Act 1997 (WA) (1997 Act), amending s 10 of the 1971 Act.
22 Explanatory memorandum to the Revenue Laws Amendment (Assessment) Bill 1997 (WA),13.
23 Section 14 of the 1997 Act, amending s 32(1a) of the 1971 Act.
24 Explanatory memorandum to the Revenue Laws Amendment (Assessment) Bill 1997 (WA),25.
25 By s 7 of the Revenue Laws Amendment and Repeal Act 2004 (WA).
26Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 39 - 40; Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492, 505.
27 Section 27(2) of the State Administrative Tribunal Act 2004 (WA).
28 Section 105(9)(c) of the State Administrative Tribunal Act.
29 Section 105(9)(c) of the State Administrative Tribunal Act.
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