Foxtel Management Pty Ltd v Commissioner of Taxation

[2000] FCA 1128

FEDERAL COURT OF AUSTRALIA

Foxtel Management Pty Ltd v Commissioner of Taxation [2000] FCA 1128

TAXATION – whether the “Foxtel Magazine” is a “program of entertainments” or a “program of amusements” within the meaning of Item 100(2)(b) of the Sales Tax (Exemptions and Classifications) Act 1992 (Cth) – whether the Magazine is a “program” – whether a television show is “an entertainment” or “an amusement”, so that the Magazine could be said to be a “program of entertainments” or a “program of amusements”

Sales Tax (Exemptions and Classifications) Act 1992 (Cth), Item 100(2)(b)

FOXTEL MANAGEMENT PTY LIMITED v COMMISSIONER OF TAXATION

N 1408 OF 1999

LEHANE J
11 AUGUST 2000
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1408 OF 1999

BETWEEN:	FOXTEL MANAGEMENT PTY LIMITED (ACN 068 671 938) APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	LEHANE J
DATE OF ORDER:	11 AUGUST 2000
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The applicant file and serve, not later than 18 August 2000, short minutes of orders appropriate to give effect to these reasons.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1408 OF 1999

BETWEEN:	FOXTEL MANAGEMENT PTY LIMITED (ACN 068 671 938) APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT

JUDGE:	LEHANE J
DATE:	11 AUGUST 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. By an application under s 39B of the Judiciary Act 1903 (Cth) the applicant, Foxtel Management, seeks three declarations, as follows:

   “1.A declaration that Item 100 of the Sales Tax (Exemptions and Classifications) Act 1992 applies to ‘FOXTEL: The Magazine’.

   2.A declaration that the purchase by the Applicant of ‘FOXTEL: The Magazine’ from Wilke & Company Pty Limited was at all material times exempt from sales tax by operation of section 24 of the Sales Tax Assessment Act 1992 and Item 100 of the Sales Tax (Exemptions and Classifications) Act 1992.

   3.A declaration that the purchase by the Applicant of copies of the August 1999 edition of ‘FOXTEL: the Magazine’ from Wilke & Company Pty Limited pursuant to an invoice dated 31 July 1999 was exempt from sales tax by operation of section 24 of the Sales Tax Assessment Act 1992 and Item 100 of the Sales Tax (Exemptions and Classifications) Act 1992.”

2. The Commissioner contends that Foxtel Management is not entitled to any of those declarations and, particularly, that Item 100 of the Sales Tax (Exemptions and Classifications) Act 1992 (Cth) (the Exemptions Act) does not apply to “FOXTEL: The Magazine” (I shall refer to that publication as the Magazine).

   FACTS

3. There is no dispute about the relevant facts.  Foxtel Management has since 23 October 1995 provided television services to subscribers who pay a monthly subscription fee.  During the same period it has published the Magazine monthly.  It has purchased copies of each issue of the Magazine from Wilke & Company Pty Limited (Wilke) for a price inclusive of sales tax.  It has provided one complimentary copy of the Magazine to each subscriber each month and has sold additional copies to subscribers and others.  There is in evidence a copy of the contract under which Foxtel Management buys copies of the Magazine from Wilke; also in evidence is a copy of an invoice from Wilke dated 31 July 1999 relating to the purchase by Foxtel Management of copies of the August addition of the Magazine.

4. A copy of the August edition of the Magazine was tendered.  That is the edition referred to in the third declaration sought.  It was tendered on the basis that it is typical of editions of the Magazine published during the relevant period and there is no suggestion that I should not so regard it.  It is a glossy magazine of 144 pages.  It is adequately, and accurately, described in the applicant’s  written submissions as follows:

   “… There is a contents page … which divides the contents of the Magazine between ‘features’ and ‘regulars’.  The contents page also contains a short editorial statement entitled ‘Publisher’s View’.

   The Magazine has four ‘features’.  They are articles of one or two pages each.  The first feature (of two pages) is not related to any program.  It is about the opening of Fox Studios in Sydney.  The other three features (each of one page) are about individuals (Jack Nicholson, Shane Warne and Ita Buttrose) who will be seen in programs during the month.  The Magazine also contains two other one page articles (not described as ‘features’) which describe the nature and content of specific programs to be shown during the month …

   The ‘regulars’ referred to on the contents page of the Magazine comprise:

   ·a ‘movie calendar’ (of two pages) showing in date order ‘[t]he pick of Foxtel’s best movies for each day in August’ with a small photograph associated with each;

   ·an ‘a-z movie guide’ (of eight pages) setting out in alphabetical order details of each movie to be shown in the month and a short commentary on each;

   ·a ‘sports diary’ (of four pages) showing the sports available on two Foxtel sports channels during the month;

   ·‘sky racing listings’ (of one page) being a tabulation of thoroughbred, harness and greyhound racing events to be televised in the month;

   ·‘news listings’ (of one page) showing the times and channels of news programs;

   ·a ‘member get member’ offer (of two pages) offering incentives for subscribers to introduce new subscribers;

   ·a ‘cmt listings’ and ‘channel guide’ (of one page in total) containing a list of programs on the ‘country music channel’ and a guide as to where to find channels on a television remote control.

   Not referred to on the contents page but comprising the bulk of the pages of the Magazine is a chronological tabulation of the programs available on each Foxtel channel each day.  The Magazine also contains several pages of advertising … and several pages of what can be described as picture posters with brief comments highlighting particular programs … .”

   As that description makes clear, by far the greater part of the Magazine is taken up with the tabulation of the programs available on each Foxtel channel each day.  The Magazine may, I think, fairly be described, by reference to its apparent principal function, as a glossy program guide.

   THE STATUTE

5. Section 24 of the Sales Tax Assessment Act 1992 (Cth) provides that:

   “An assessable dealing is not taxable if:

   (a)the goods are covered by an exemption Item that is in force at the time of the dealing; and

   (b)all the requirements of that Item have been met at or before the time of the dealing.”

   An exemption Item is defined in s 5 to mean an item or subitem in Sch 1 to the Exemptions Act. Item 100 of Sch 1 to the Exemptions Act is, so far as it is relevant, as follows:

   “(1)Books, pamphlets, leaflets, periodicals, magazines or printed music.

   (2)      This Item does not cover:

   …

   (b)programs (including schedules, syllabuses or guides), or souvenirs, of entertainments, amusements, exhibitions, competitions or sporting events.”

6. It was common ground that the Magazine is a periodical or a magazine.  It was common ground also that the Magazine is covered by, and meets all the requirements of, Item 100 unless it falls within par 2(b).  Thus, the parties are at issue on two questions.  The first is, is the Magazine a program or a souvenir?  The other, which arises if it is either a program or a souvenir, is whether it is a program or souvenir of entertainments or amusements.

   THE SUBMISSIONS

7. Little time was spent in oral argument on the former of the two questions.  The applicant submitted that the Magazine should not be characterised as a “program”.  Though it contained programs of Foxtel broadcasts, it contained other things as well so that it was not a mere “program”.  The question was whether its essential character was that of a “program”, not whether it contained programs.  There is no doubt that that is a correct description of the question to be asked.  But, in my view, the question can be answered shortly.  Having regard both to the proportion of the Magazine devoted to program schedules and its evident purpose, the Magazine is, according to its essential character, a program.

8. The question whether, being a program, the Magazine is a program of entertainments or amusements is less easy and it is to that question that argument was mainly directed.  Senior counsel for Foxtel Management submitted that the history of Item 100(2)(b) indicated the way in which it should be construed.  The corresponding exception in the Sales Tax Exemptions Act 1935 (Cth), as originally enacted, was to be found in Item 51(b)(ii).  Covered by that exception were “race books, betting books and programs of entertainments and events”.  Item 51 was replaced by the Sales Tax Exemptions Act 1938 (Cth). The exception became:

   “(1) (b)programmes, schedules, syllabuses, guides or souvenirs of entertainments, amusements, exhibitions, competitions or sporting events;”

   The then Treasurer indicated, in his second reading speech, that the amendment was for the purpose of removing ambiguities and doubts, and added:

   “No fresh liabilities will be imposed and no new exemptions will be granted except for validation purposes.”

   Asked how far the bill would affect the revenue, the Treasurer replied, “Not at all”.

9. Item 100(2)(b) is in substantially the same terms as the 1938 version of Item 51(1)(b). Consequently, counsel submitted, it should be construed as having the same meaning as the 1938 version and, in turn, the meaning of the original version of 1935. And the 1935 exception should be construed in the light of what was then regarded as an “entertainment”, exemplified by the definition in s 2 of the Entertainments Tax Assessment Act 1916 (Cth) – “ ‘Entertainment’ includes any exhibition, performance, lecture, amusement, game or sport for admission to which payment is made” – as interpreted in a series of decisions of the High Court: Federal Commissioner of Taxation v Bendrodt (1920) 28 CLR 101; Clyde v Bolot (1924) 34 CLR 144; Commonwealth v Luna Park Ltd (1925) 36 CLR 31; Federal Commissioner of Taxation v Rooney (1925) 36 CLR 325. It may fairly be said, I think, that, for present purposes, the decisions add little to the statutory definition; and, of course, the statutory definition itself forms no part of the 1992 sales tax legislation or its predecessors.

10. It was further submitted on behalf of Foxtel Management that a “liberal” or “robust” construction should be adopted in favour of the taxpayer: Telstra Corporation Ltd v Federal Commissioner of Taxation (1996) 68 FCR 566 at 569, 570 per Heerey J; and that while, in the technical sense referred to by Dawson J in Street v Queensland Bar Association (1989) 168 CLR 461 at 537, 538, the denotation of “entertainments” and “amusements” might change from time to time, the connotation of each remains constant. Counsel also referred me to Burchett J’s characterisation, in passing, of par 51(1)(b) as referring “to a quite limited class of documents associated with the occasions referred to in it”: Commissioner of Taxation v Thomson Australian Holdings Pty Ltd (1989) 25 FCR 481.

11. Senior counsel for the Commissioner relied on authorities to the effect that words in a statute are to be construed in accordance with their denotation from time to time: for example, Lake Macquarie Shire Council v Aberdare County Council (1970) 123 CLR 327. The use of the plural “entertainments” and “amusements” was significant: and the test was one of popular usage (Rotary Offset Press Pty Ltd v Deputy Commissioner of Taxation (1972) 72 ATC 4212 at 4213; Downland Publications Ltd v Deputy Commissioner of Taxation (1983) 57 ALJR 286 at 288). Both sides referred to various dictionary definitions, to which I shall return.

    CONSIDERATION

12. Two propositions can, I think, be accepted immediately, without further reference to authority.  One is that there is no indication in the context suggesting that a meaning other than the ordinary or popular one is to be given to the terms used in Item 100(2)(b).  The other is that a program for an entertainment or an amusement may be within that paragraph even if it is an entertainment or amusement of a kind unknown in the 1930s.  I agree also with senior counsel for the Commissioner that it is significant that the plural forms “entertainments” and “amusements” are used, though, as will appear, I do not regard that use as pointing in the direction in which senior counsel sought to lead me.

13. There is nothing unexpected in the dictionary definitions.  The Macquarie Dictionary defines “entertainment” as:

    “1. the act of entertaining; agreeable occupation for the mind; diversion, or amusement.   2.  something affording diversion or amusement, esp. an exhibition or performance of some kind.   3.  Hospitable provision for the wants of guests.”

    The same dictionary defines “amusement” as:

    “1. the state of being amused; enjoyment.   2.  that which amuses; pastime; entertainment.    3.  a mechanical entertainment, as a merry-go‑round at a fair.”

    The Oxford English Dictionary includes in its definition of “entertainment” “the action of occupying (a person’s) attention agreeably; interesting employment; amusement”.  It includes also “that which affords interest or amusement” and:

    “c. esp. a public performance or exhibition intended to interest or amuse.”

    The Oxford English Dictionary defines amusement substantially similarly to the Macquarie Dictionary.  Finally, I may mention the other dictionary definition of “entertainment” to which I was referred, that in the 6^th edition of the Concise Oxford Dictionary:

    “entertainmentn.  In vbl senses; hospitality; amusement (much to my entertainment); diversions or amusements for guests etc.; public performance or show.”

14. Those definitions, like the authorities to which I was referred, offer guidance, not a solution.  That is by no means an unusual experience when one is construing this legislation.  When senior counsel for the Commissioner submitted that the use of the plural was significant, he was contending for a construction which regarded an individual television show (or program) as an entertainment or amusement in the ordinary, popular (or dictionary) sense, so that the Magazine was to be regarded as a program (a word which includes schedule or guide) of entertainments or amusements: it constituted, primarily, a schedule of a great number of them.

15. That argument has some attraction.  It recognises, in my view correctly, that the singular of “entertainments” is “an entertainment” (not “entertainment”) and, of “amusements”, “an amusement” (not “amusement”).  My difficulty, however, is with the proposition that a television show is, in ordinary usage, described as “an entertainment” or “an amusement”.  Watching television may be entertainment and it may be that the act of doing so can be described as an amusement.  That does not answer the question whether a television program is “an entertainment” or “an amusement”; and, in ordinary parlance (and I think the dictionary definitions support this; certainly they do not refute it), I do not think it is.  In the unlikely event that a member of one’s family said “I am going to watch an entertainment”, I do not think one would immediately understand that as a statement of intention to do something which might involve no more than turning on the television set.

16. That view of the matter gets support, I think, a sociis.  The context includes – as well as entertainments and amusements – exhibitions, competitions or sporting events; and things of which there may be souvenirs as well as programs.  Each, I think, suggests something to which a number of people may go, for entertainment or amusement (or, possibly, instruction or edification): not a relatively solitary and domestic activity, such as watching television.  It follows, of course, that I would not accept a proposition, put by senior counsel for the Commissioner, that a performance even in a recording studio might be an entertainment or an amusement.  It is not necessary, I think, to seek support in legislation of 1916, or even in the history of the sales tax legislation, to reach that conclusion.

    CONCLUSION

17. For those reasons, in my view, the application succeeds.  Foxtel Management is, I think, clearly entitled to the third declaration sought and, on the assumption that during the relevant period no edition of the Magazine has differed, in any material respect, from the August 1999 edition, to the second declaration.  The first – if Foxtel Management presses a claim for a general declaration of that kind – may need some qualification.  The Commissioner should pay Foxtel Management’s costs of the application.  Foxtel Management should file and serve, no later than 18 August 2000, short minutes of orders appropriate to give effect to these reasons.  If any aspect of the orders needs argument, arrangements for that purpose may be made with my associate.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane.

Associate:

Dated:             11 August 2000

Counsel for the Applicant:	D H Bloom QC S J Gageler
Solicitor for the Applicant:	PricewaterhouseCoopers Legal
Counsel for the Respondent:	A H Slater QC R Hamilton
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	2 August 2000
Date of Judgment:	11 August 2000