EXPLANATORY STATEMENT
Select Legislative Instrument 2007 No. 241
Issued by authority of the Minister for Revenue
and Assistant Treasurer
Commonwealth Places (Mirror Taxes) Act 1998
Commonwealth Places (Mirror Taxes) Amendment Regulations 2007 (No. 2)
Subsection 25(1) of the Commonwealth Places (Mirror Taxes) Act 1998 (the MTA) provides that the Governor-General may make regulations prescribing matters required or permitted by the MTA to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the MTA.
The Regulations update references to State tax legislation so that the relevant Victorian tax laws can operate in respect of Commonwealth places.
The MTA provides a framework for the imposition of taxes, which mirror certain State taxes, on businesses operating in Commonwealth places in the States. Examples of Commonwealth places are Commonwealth airports and post offices. The revenue is collected by the States on behalf of the Commonwealth and appropriated back to the States. The MTA was enacted in response to the High Court decision in Allders International Pty Ltd v Commissioner of State Revenue (Victoria) (1996) 186 CLR 630, in which the High Court held that the imposition of stamp duty on a lease covering part of a Commonwealth place was invalid because the Commonwealth has the exclusive power to make laws with respect to Commonwealth places (paragraph 52(i) of the Constitution). The decision meant that other State taxes may similarly be invalid in relation to Commonwealth places.
The relevant State taxes are listed in Schedule 1 of the MTA and may also be prescribed by the Commonwealth Places (Mirror Taxes) Regulations 2000 (the Principal Regulations).
The State tax laws, which the MTA and the Principal Regulations apply, have remained the same in substance. However, the references to certain State legislation have been updated to reflect recent revisions to that legislation.
The Regulations ensure the continued operation of the existing scheme and, therefore, should not increase compliance costs for taxpayers or administration costs for the States. The new version of the Victorian tax legislation which is prescribed is the Payroll Tax Act 2007.
Taxpayers, operating in Commonwealth places in the relevant States, have not been consulted on the changes as the Regulations do not substantially alter existing arrangements. In such circumstances, paragraph 18(2)(a) of the
Legislative Instruments Act 2003 provides an exception to the need for consultation with affected persons in the making of regulations.
Consultation has been undertaken with the Victorian Treasury and State Revenue Office in listing the State tax legislation.
The Act specifies no conditions that need to be satisfied before the power to make the Regulations may be exercised.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations are taken to have commenced on 1 July 2007.
The Regulations are retrospective, reflecting the date on which the Victorian State legislation was enacted. This ensures that the current version of the State legislation is applied under the MTA. Subsection 25(2) of the MTA provides an exemption to the prohibition on retrospective regulations in subsection 12(2) of the Legislative Instruments Act 2003.
Overview
The Commonwealth Places (Mirror Taxes) Amendment Regulations 2007 (No. 2) were enacted to update references to State tax legislation, ensuring that the relevant Victorian tax laws can apply to businesses operating in Commonwealth places. These regulations are a response to the Commonwealth Places (Mirror Taxes) Act 1998 (MTA), which was itself introduced following the High Court decision in Allders International Pty Ltd v Commissioner of State Revenue (Victoria). The MTA addresses the issue of the invalidity of State taxes on Commonwealth places, as ruled by the High Court, by providing a framework for the imposition of taxes that mirror certain State taxes on businesses in these areas. The 2007 regulations ensure the continued operation of the existing scheme without increasing compliance costs for taxpayers or administration costs for the States, reflecting the recent revisions to State legislation. The Parliament of Australia enacted these regulations to maintain the integrity of the MTA framework, allowing States to collect revenue on behalf of the Commonwealth from businesses operating in Commonwealth places.
Scope and Application
The Commonwealth Places (Mirror Taxes) Act 1998 applies to businesses operating in Commonwealth places, which include locations such as Commonwealth airports and post offices. The Act provides a framework for imposing taxes on these businesses that mirror certain state taxes. The primary purpose of this legislation is to address the legal issues that arose from the High Court's decision in Allders International Pty Ltd v Commissioner of State Revenue (Victoria), where it was held that the imposition of state stamp duty on leases covering parts of Commonwealth places was invalid due to the Commonwealth's exclusive power over such places. By enabling states to collect these mirror taxes on behalf of the Commonwealth and then appropriating the revenue back to the states, the Act ensures the continuity and validity of state taxation in these specific areas. The application of the Act is complemented by the Commonwealth Places (Mirror Taxes) Regulations 2000, which can prescribe additional state taxes and update references to state tax legislation to reflect recent changes, such as the new Payroll Tax Act 2007 in Victoria. The Act does not specify conditions for the exercise of its regulatory power, and the regulations themselves can extend or restrict application through subordinate instruments, with any retrospective changes justified under specific provisions of the Act.
Key Provisions
The Commonwealth Places (Mirror Taxes) Amendment Regulations 2007 (No. 2) (the Regulations) primarily serve to update the references to State tax legislation within the Commonwealth Places (Mirror Taxes) Act 1998 (MTA). Specifically, section 2 of the Regulations updates the references to the Victorian tax laws to ensure that the relevant Victorian tax legislation, such as the Payroll Tax Act 2007, can operate in respect of Commonwealth places like airports and post offices. This amendment is necessary to maintain the integrity of the existing tax framework established by the MTA, which allows for the imposition of taxes that mirror certain State taxes on businesses operating in Commonwealth places within the States.
The obligations imposed by the Regulations on the parties involved are primarily administrative in nature. For instance, businesses operating in Commonwealth places must continue to comply with the updated State tax laws as specified by the MTA. Additionally, the States are required to collect the relevant taxes on behalf of the Commonwealth and appropriate the revenue back to the States. The Regulations ensure that the States' tax collection processes remain aligned with the provisions of the MTA, thereby facilitating the continued operation of the existing tax scheme.
In terms of enforcement, the MTA itself does not explicitly outline specific offences, penalties, or consequences for breaches of the Regulations. However, the general legal framework governing the administration of taxes in Australia would apply. Generally, non-compliance with tax laws can lead to civil penalties such as fines, and in severe cases, criminal charges which may result in imprisonment. The exact penalties would depend on the specific provisions of the State tax laws being mirrored under the MTA. The Regulations, by ensuring the continued operation of the tax scheme, help maintain the legal framework within which these penalties and consequences are applied.