EXPLANATORY STATEMENT
Select Legislative Instrument 2011 No. 2
Issued by authority of the Assistant Treasurer
Commonwealth Places (Mirror Taxes) Act 1998
Commonwealth Places (Mirror Taxes) Amendment Regulations 2011 (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 Queensland, South Australian and Tasmanian 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.
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 Queensland, South Australian and Tasmanian Treasuries and State Revenue Offices 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.
Schedule 1 of the Regulations is taken to have commenced on 1 July 2008, Schedule 2 of the Regulations is taken to have commenced on 1 July 2009 and Schedule 3 of the Regulations is taken to have commenced on 30 June 2010.
The Regulations are retrospective, reflecting the date on which the 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 2011 (No. 1) were introduced to address the need to update references to State tax legislation, specifically in Queensland, South Australia and Tasmania, to ensure they can operate in respect of Commonwealth places such as Commonwealth airports and post offices. The regulations are a response to the High Court's decision in Allders International Pty Ltd v Commissioner of State Revenue (Victoria), which held that the imposition of stamp duty on a lease covering part of a Commonwealth place was invalid as the Commonwealth has exclusive power to make laws with respect to Commonwealth places. The Act, enacted in 1998, provides a framework for imposing taxes that mirror certain State taxes on businesses operating in Commonwealth places within the states, with revenue collected by the states on behalf of the Commonwealth and then appropriated back to those states. The policy objective is to ensure the continued operation of the existing scheme and avoid increasing compliance costs for taxpayers or administration costs for the states. The regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Scope and Application
The Commonwealth Places (Mirror Taxes) Act 1998 applies to businesses operating within Commonwealth places, such as Commonwealth airports and post offices, situated in states of Australia. The Act was enacted in response to a High Court decision which found that certain state taxes imposed on leases covering part of a Commonwealth place were invalid, as the Commonwealth has the exclusive power to make laws with respect to Commonwealth places. The Act provides a framework for the imposition of taxes that mirror certain state taxes on businesses operating in these areas. The taxes are collected by the states on behalf of the Commonwealth and then appropriated back to the states. The Act’s scope is extended through subordinate legislation, the Commonwealth Places (Mirror Taxes) Regulations 2000, which list the relevant state taxes and may prescribe additional ones. The 2011 Amendment Regulations update references to state tax legislation to reflect recent revisions, ensuring the continued operation of the existing scheme without increasing compliance or administration costs. These Regulations do not require consultation with taxpayers as they do not substantially alter existing arrangements, as per the Legislative Instruments Act 2003.
The Act applies to entities and persons conducting business within Commonwealth places in the states of Queensland, South Australia, and Tasmania. The geographic reach of the Act is limited to Commonwealth places within these states, and the application of the Act is facilitated through the mirror taxes imposed by state legislation, updated via the Regulations. The Act does not specify any conditions that need to be satisfied before the power to make the Regulations may be exercised. The Regulations are retrospective, aligning with the dates on which the state legislation was enacted, and are exempt from the prohibition on retrospective regulations under the Legislative Instruments Act 2003. This ensures that the most current version of the state legislation is applied under the Act.
Key Provisions
The main operative sections of the Commonwealth Places (Mirror Taxes) Amendment Regulations 2011 (No. 1) pertain to updating references to State tax legislation to ensure the continued operation of the existing scheme for taxes on businesses operating in Commonwealth places. Specifically, Schedule 1 of the Regulations updates the references to Queensland tax laws, Schedule 2 updates South Australian tax laws, and Schedule 3 updates Tasmanian tax laws. These schedules reflect the changes in the relevant State tax legislation to ensure the scheme remains effective and does not incur increased compliance or administrative costs.
The Regulations impose certain obligations on the parties and entities they govern. Primarily, they require the updating of references to State tax legislation to ensure that the relevant Queensland, South Australian, and Tasmanian tax laws can operate in respect of Commonwealth places. These updates ensure that businesses operating in Commonwealth places in the respective states are subject to the correct tax laws, and that the revenue collected is appropriately managed and appropriated back to the states. The Regulations also stipulate that the updated references are retrospective, meaning they apply from the date the State legislation was originally enacted, ensuring continuity and clarity in the application of the tax laws.
Breaches of the provisions outlined in the Commonwealth Places (Mirror Taxes) Act 1998 and the related Regulations can lead to various civil and criminal consequences. While the specific offences and penalties are not detailed within the explanatory statement, it is understood that the Act and Regulations are designed to ensure compliance with the tax laws applicable to businesses operating in Commonwealth places. Failure to comply with these laws could potentially result in legal action, fines, or other penalties as prescribed under the relevant State tax laws. The precise nature and severity of these consequences would be governed by the specific provisions of the updated State tax legislation referenced within the Regulations.