EXPLANATORY STATEMENT
Select Legislative Instrument 2008 No. 214
Issued by authority of the Treasurer
Commonwealth Places (Mirror Taxes) Act 1998
Commonwealth Places (Mirror Taxes) Amendment Regulations 2008 (No. 1)
Subsection 25(1) of the Commonwealth Places (Mirror Taxes) Act 1998 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Regulations update references to State tax legislation so that the relevant Western Australian tax laws can operate in respect of Commonwealth places.
The Act 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 Act 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 Commonwealth of Australia Constitution Act 1900). 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 Act and may also be prescribed by the Commonwealth Places (Mirror Taxes) Regulations 2000 (the Principal Regulations).
The State tax laws, which the Act 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 Western Australian tax legislation which is prescribed is the Duties Act 2008.
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 Western Australian 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 2008.
The Regulations are retrospective, reflecting the date on which the Western Australian State legislation was enacted. This ensures that the current version of the State legislation is applied under the Act. Subsection 25(2) of the Act 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 2008 (No. 1) were introduced to update the references to the Western Australian tax legislation in order to ensure the continued operation of the Commonwealth Places (Mirror Taxes) Act 1998. This Act provides a legislative framework allowing the imposition of certain State taxes, mirroring Commonwealth taxes, on businesses operating in Commonwealth places within the States. The 1998 Act was enacted in response to a High Court decision that invalidated the imposition of stamp duty on leases covering part of Commonwealth places due to the Commonwealth's exclusive legislative power over such places under the Constitution. The Regulations were issued under the authority of the Treasurer and aim to ensure that the mirror tax scheme operates effectively without increasing compliance or administration costs. The changes do not substantially alter existing arrangements and were made without consultation with affected taxpayers as they are not deemed to have a significant impact. The Regulations are effective from 1 July 2008, the date the updated Western Australian State legislation was enacted.
Scope and Application
The Commonwealth Places (Mirror Taxes) Act 1998 applies to businesses operating in Commonwealth places within the states, such as Commonwealth airports and post offices, and provides a legislative framework for imposing taxes that mirror certain state taxes on these businesses. The Act is designed to address the issue of state taxes being invalid in relation to Commonwealth places due to the Commonwealth's exclusive legislative power over such areas, as confirmed by the High Court in Allders International Pty Ltd v Commissioner of State Revenue (Victoria). The Act's jurisdiction covers the entire Commonwealth of Australia, and its application is contingent upon the specific state tax laws listed in Schedule 1 or prescribed by the Commonwealth Places (Mirror Taxes) Regulations 2000. These regulations may also be updated through subordinate instruments, such as the Commonwealth Places (Mirror Taxes) Amendment Regulations 2008 (No. 1), which have been enacted to reflect changes in state tax legislation, ensuring that the most current version of state tax laws is applied. Notably, these regulations are retrospective, applying from the date the amended state legislation was enacted, and have been made without the need for consultation with affected taxpayers due to the minor nature of the changes.
Key Provisions
The key provisions of the Commonwealth Places (Mirror Taxes) Amendment Regulations 2008 (No. 1) (the Regulations) are detailed under section 25(1) of the Commonwealth Places (Mirror Taxes) Act 1998 (the Act). These Regulations update the references to State tax legislation, ensuring the relevant Western Australian tax laws can be applied to Commonwealth places, such as airports and post offices. The main purpose of these amendments is to maintain the existing framework for the imposition of taxes that mirror certain State taxes on businesses operating in these Commonwealth places. The taxes are collected by the States on behalf of the Commonwealth and then appropriated back to the States, ensuring that the States are appropriately compensated for the taxes collected within their borders.
Under the Regulations, businesses operating in Commonwealth places in the relevant States are subject to specific obligations and requirements. These include complying with the updated Western Australian tax laws, particularly as outlined in the Duties Act 2008. Businesses must ensure their operations adhere to the tax laws as prescribed by the Act and the Regulations, thereby avoiding any legal complications that may arise from the improper application of State taxes to Commonwealth places. The Regulations ensure that the existing scheme of tax collection and distribution remains effective, with no significant changes to the compliance or administration processes for taxpayers or the States.
The Regulations do not introduce any new offences or penalties. However, any breach of the State tax laws as applied under the Act and these Regulations could lead to civil or criminal consequences as stipulated in the relevant State legislation. For instance, non-compliance with the updated Western Australian tax laws could result in penalties, fines, or other enforcement actions as prescribed by the Duties Act 2008. While the Regulations themselves do not specify maximum penalties, the consequences of non-compliance with the applicable State tax laws would apply. It is important for businesses to stay informed about the specific penalties and enforcement measures under the relevant State legislation to ensure full compliance.