Crown Debts (Priority) Act 1981
Act No. 93 of 1981 as amended
This compilation was prepared on 26 September 2006
taking into account amendments up to Act No. 101 of 2006
The text of any of those amendments not in force
on that date is appended in the Notes section
The operation of amendments that have been incorporated may be
affected by application provisions that are set out in the Notes section
Prepared by the Office of Legislative Drafting and Publishing,
Attorney‑General’s Department, Canberra
Contents
1 Short title [see Note 1]
2 Commencement [see Note 1]
3 Crown subject to State and Territory laws with respect to priority
4 Certain rights of the Crown not affected
Notes
An Act relating to the priority of Crown debts
1 Short title [see Note 1]
This Act may be cited as the Crown Debts (Priority) Act 1981.
2 Commencement [see Note 1]
This Act shall come into operation on the day on which the Companies Act 1981 comes into operation.
3 Crown subject to State and Territory laws with respect to priority
Notwithstanding any prerogative right or privilege of the Crown in right of the Commonwealth, the Crown in right of the Commonwealth is subject to any provision of a law of a State or Territory:
(a) relating to the order in which debts or liabilities of a body (whether corporate or unincorporate) are to be paid or discharged;
(b) relating to the avoidance of preferences received by creditors of a body (whether corporate or unincorporate); or
(c) relating to the effect on creditors or members of a body (whether corporate or unincorporate) of a compromise or arrangement between the body and another person or other persons.
4 Certain rights of the Crown not affected
Nothing in section 3, or in the Corporations Act 2001 affects the operation of former subsections 221YHJ(3), (4) and (5) or 221YHZD(3), (4) and (5) or former section 221YU of the Income Tax Assessment Act 1936 or of section 32 of the Life Insurance Policy Holders’ Protection Levies Collection Act 1991.
Note: The provisions of the Income Tax Assessment Act 1936 referred to do not apply to liabilities arising after 30 June 1993.
Notes to the Crown Debts (Priority) Act 1981
Note 1
The Crown Debts (Priority) Act 1981 as shown in this compilation comprises Act No. 93, 1981 amended as indicated in the Tables below.
For application, saving or transitional provisions made by the Corporations (Repeals, Consequentials and Transitionals) Act 2001, see Act No. 55, 2001.
All relevant information pertaining to application, saving or transitional provisions prior to 14 September 2006 is not included in this compilation. For subsequent information see Table A.
Table of Acts
Act | Number
and year | Date
of Assent | Date of commencement | Application, saving or transitional provisions |
Crown Debts (Priority) Act 1981 | 93, 1981 | 18 June 1981 | 1 July 1982 (see s. 2 and Gazette 1982, No. S124) | |
Income Tax (Payments for Work) (Consequential Amendments)… |
Overview
The Crown Debts (Priority) Act 1981, enacted by the Parliament of Australia, was introduced to address the issue of the Commonwealth Crown's priority in the payment of debts, ensuring alignment with state and territory laws concerning the order of debt payments and the avoidance of creditor preferences. This Act explicitly subjects the Commonwealth Crown to state and territory laws that determine the priority of debts and liabilities, as well as laws that address the effects of compromises or arrangements between a body and other entities on its creditors or members. The Act does not affect certain specified rights of the Crown under the Income Tax Assessment Act 1936 and the Life Insurance Policy Holders’ Protection Levies Collection Act 1991. The policy objective of the Act is to maintain a consistent legal framework for debt priorities across jurisdictions, thereby preventing any potential preferential treatment of the Crown over other creditors.
Scope and Application
The Crown Debts (Priority) Act 1981 applies to the Crown in right of the Commonwealth, making it subject to state and territory laws regarding the priority of debts, avoidance of preferences for creditors, and the effects of compromises or arrangements involving corporate or unincorporated bodies. This Act applies to both existing and future debts and liabilities of bodies governed by state or territory laws, ensuring that the Commonwealth’s debts do not take precedence over those stipulated by these jurisdictions. Notably, the Act excludes certain rights outlined in the Income Tax Assessment Act 1936 and the Life Insurance Policy Holders’ Protection Levies Collection Act 1991, which are not affected by the provisions of this Act or the Corporations Act 2001. The Act’s application can be extended or restricted through subordinate instruments, but no such instruments are explicitly detailed in this particular Act.
Key Provisions
- The Crown Debts (Priority) Act 1981 establishes certain legal principles regarding the priority of debts owed to the Crown. Section 3(a) of the Act states that the Crown in right of the Commonwealth is subject to state and territory laws that determine the order in which debts or liabilities of a body, whether corporate or unincorporate, are to be paid or discharged. This means that in the event of insolvency, the Crown will follow the same priority rules as other creditors. Section 3(b) applies to laws that avoid preferences received by creditors, ensuring that no creditor receives preferential treatment over others. Finally, section 3(c) covers laws related to the effects of compromises or arrangements between a body and another person or entity on the creditors or members of that body. The Crown will be bound by these arrangements in the same way as other parties.
- The Act imposes several obligations on the parties it governs. Firstly, it requires the Crown to adhere to state and territory laws that determine the priority of debts. This means that the Crown must follow the same rules and procedures as other creditors when it comes to the payment or discharge of debts. Secondly, the Crown must comply with any preferences avoidance laws enacted by the states or territories. This includes refraining from giving preferential treatment to certain creditors over others. Lastly, the Crown must respect any compromises or arrangements made between a body and another person or entity, as these arrangements will have the same effect on the Crown as they do on other creditors.
- The Crown Debts (Priority) Act 1981 does not explicitly outline offences, penalties, or civil/criminal consequences for breach. However, the obligations imposed by the Act are significant and failure to comply with state and territory laws regarding the priority of debts, preferences avoidance, and compromises or arrangements could result in legal consequences for the Crown. The specific penalties or consequences would depend on the relevant state or territory laws, and could include fines, legal action, or other remedies available under those laws. Additionally, the Crown may also face reputational damage or loss of trust if it fails to adhere to the same rules and procedures as other creditors.
- Area of Law
- Corporate Law & Governance
- Instrument
- Act
- Concepts
- Commencement Provisions
- Offence Provisions
- Regulatory Standards
