State of South Australia & Anor v The Commonwealth of Australia

In the High Court of Australia, the State of South Australia and the South Australian Superannuation Fund Investment Trust (SASFIT) brought proceedings against the Commonwealth of Australia and the Commissioner of Taxation. The dispute concerned the imposition of income tax on the assessable income of SASFIT. Questions were reserved for the Court's determination pursuant to section 18 of the Judiciary Act 1903 (Cth).

The primary legal issues before the Court were whether the imposition of income tax on certain items of SASFIT's assessable income constituted the imposition of a tax on property within the meaning of section 114 of the Constitution. If it did, a further issue arose as to whether SASFIT was the property of the State of South Australia, and whether SASFIT itself could be considered the State for the purposes of section 114.

The Court was informed that the Commonwealth no longer contended that the Fund was not property of the State. This concession significantly narrowed the scope of the dispute, as it meant the Court did not need to definitively determine whether SASFIT was the State. The focus shifted to whether the tax imposed on the income derived from the State's property was itself a tax on that property, thereby engaging section 114 of the Constitution. The plaintiffs argued that taxing the income of the Fund, which was accepted as State property, was tantamount to taxing the property itself.