Commonwealth Places Windfall Tax (Collection) Act 1998

Administered by Department of the Treasury

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No. 25, 1998

Commonwealth Places Windfall Tax (Collection) Act 1998

No. 25, 1998

An Act relating to the imposition and collection of Commonwealth places windfall tax

Contents

Part 1—Preliminary 1

1 Short title..................................1

2 Commencement..............................2

3 This Act binds the Crown.........................2

4 Definitions.................................2

5 Administration...............................2

Part 2—Liability 3

6 Taxable amount..............................3

7 Liability to windfall tax..........................3

Part 3—Collection 4

8 State must withhold windfall tax from taxable amounts.......4

9 Taxpayer entitled to credit for amount deducted by State......4

Part 4—Miscellaneous 6

10 Annual report................................6

11 Arrangements with States.........................6

12 Commonwealth payments to States...................6

13 Regulations.................................6

Commonwealth Places Windfall Tax (Collection) Act 1998

No. 25, 1998

An Act relating to the imposition and collection of Commonwealth places windfall tax

[Assented to 17 April 1998]

The Parliament of Australia enacts:

Part 1—Preliminary

1 Short title

This Act may be cited as the Commonwealth Places Windfall Tax (Collection) Act 1998.

2 Commencement

This Act is taken to have commenced on 6 October 1997.

3 This Act binds the Crown

This Act binds the Crown in each of its capacities.

4 Definitions

(1) In this Act, unless the contrary intention appears:

Commissioner means the Commissioner of Taxation.

liable to repay has the meaning given by subsection (2).

State taxing law has the same meaning as in the Commonwealth Places (Mirror Taxes) Act 1998.

windfall tax means the tax payable under this Act.

(2) For the purposes of this Act, a State is liable to repay an amount to a person if:

(a) the State is liable to repay the amount to the person; or

(b) the State is required or permitted to offset the amount against other amounts that are owing, or may become owing, to the State by the person; or

5 Administration

The Commissioner has the general administration of this Act.

Part 2—Liability

6 Taxable amount

(1) A taxable amount is any amount that meets all the following conditions:

(a) a State is liable to repay the amount to a person (the taxpayer) because a State taxing law is wholly or partly invalid because of paragraph 52(i) of the Constitution;

(b) the amount is by way of repayment of an amount paid under the State taxing law before 6 October 1997;

(2) A taxable amount is reduced by deducting any part of it that a State would have been liable to repay even if the State taxing law were wholly valid.

Example: An amount that is repayable solely because of an overpayment by the taxpayer would be deducted.

7 Liability to windfall tax

(1) The taxpayer in respect of a taxable amount is the person to whom the State was liable to repay the taxable amount.

Note: Section 8 extinguishes the liability of the State to repay the taxable amount.

(2) The person who is the taxpayer in respect of a taxable amount is liable to pay windfall tax on the taxable amount.

Part 3—Collection

8 State must withhold windfall tax from taxable amounts

State must withhold windfall tax

(1) A State that is liable to repay a taxable amount must not repay or otherwise apply the taxable amount without first having deducted the windfall tax on the taxable amount.

(2) As soon as practicable after making a deduction under subsection (1), the State must notify the taxpayer in writing that the deduction was made.

(3) An amount deducted under subsection (1) is payable by the State to the Commonwealth.

State discharged from liability to account

(4) When a State makes a deduction from a taxable amount under subsection (1) (or purportedly under subsection (1)), the State is discharged from any liability to pay or account for the amount deducted to any person other than the Commissioner.

9 Taxpayer entitled to credit for amount deducted by State

(1) When a State makes a deduction from a taxable amount under section 8 (or purportedly under section 8), the taxpayer is entitled to a credit equal to the amount deducted.

(2) However, the taxpayer is not entitled to a credit for any amount purportedly deducted under section 8 in relation to an amount paid under a valid State taxing law.

(3) The credit is a debt due to the taxpayer by the Commissioner on behalf of the Commonwealth.

(4) The Commissioner may apply some or all of the credit against the taxpayer’s liability to windfall tax (whether or not that liability is in respect of the taxable amount that gives rise to the credit). The Commissioner must refund any amount not applied.

Part 4—Miscellaneous

10 Annual report

After the end of each financial year, the Commissioner must give a report to the Minister, for presentation to the Parliament, on the operation of this Act during the year.

11 Arrangements with States

(1) The Commissioner may make an arrangement with an appropriate officer or authority of a State about any matter in connection with the administration of this Act.

(2) In particular, an arrangement may relate to the Commissioner’s delegation of powers or functions under this Act or the regulations.

Note: Section 8 of the Taxation Administration Act 1953 contains the Commissioner’s delegation power.

12 Commonwealth payments to States

(1) Whenever a State becomes liable to make a payment to the Commonwealth under section 8, the Commonwealth is liable to pay an equal amount to the State.

(2) Amounts payable by the Commonwealth under subsection (1) are to be reduced by amounts that the Commissioner is liable to refund under subsection 9(4).

(3) The Consolidated Revenue Fund is appropriated for the purposes of this section.

13 Regulations

(1) The Governor‑General may make regulations prescribing matters:

(a) required or permitted by this Act to be prescribed; or

(b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.

(2) In particular, the regulations may prescribe penalties for offences against the regulations by way of fines of up to 10 penalty units.

[Minister's second reading speech made in—

House of Representatives on 5 March 1998

Senate on 23 March 1998]

(14/98)

Overview

The Commonwealth Places Windfall Tax (Collection) Act 1998, enacted by the Parliament of Australia, addresses the issue of windfall gains resulting from the invalidation of certain state taxes deemed unconstitutional. This Act was introduced to ensure that states are prevented from profiting from taxes that contravene the Constitution and to manage the financial implications of these invalidations. The Act outlines the process by which states must withhold and remit windfall tax to the Commonwealth, ensuring that the financial burden does not fall on individual taxpayers. Additionally, it provides for arrangements between the Commonwealth and states to facilitate the administration of the tax, as well as mechanisms for annual reporting and regulation-making to support the effective implementation of the Act. The overarching policy objective is to maintain fiscal integrity and fairness in the tax system by addressing the unintended consequences of constitutional tax invalidations.

Scope and Application

The Commonwealth Places Windfall Tax (Collection) Act 1998 applies to any person who is a taxpayer in respect of a taxable amount, which is defined as any amount that a State is liable to repay to the taxpayer because a State taxing law is wholly or partly invalid under the Constitution, and the amount is by way of repayment of an amount paid under the State taxing law before 6 October 1997. The Act applies to all states and territories within Australia. The Act requires the Commissioner of Taxation to have the general administration and collection of the windfall tax, and states are obligated to withhold the windfall tax from any taxable amounts and notify the taxpayer in writing of the deduction. The taxpayer is entitled to a credit for the amount deducted, which the Commissioner may apply against the taxpayer’s liability to windfall tax. The Act also provides for arrangements between the Commissioner and an appropriate officer or authority of a State, and for Commonwealth payments to States. The Act extends to subordinate instruments, such as regulations, which may prescribe penalties for offences against the regulations by way of fines of up to 10 penalty units.

Key Provisions

The Commonwealth Places Windfall Tax (Collection) Act 1998 (sections 6 and 7) establishes the parameters for the imposition of a windfall tax on certain amounts repayable by states to taxpayers due to invalid state taxing laws. A 'taxable amount' is defined as any amount that a state is liable to repay to a taxpayer because of the invalidity of a state taxing law under the Constitution, and that amount is claimed by the taxpayer or ordered by a court to be paid (section 6). The person liable to pay the windfall tax is the taxpayer in respect of the taxable amount (section 7). Under the Act, states are required to withhold the windfall tax from any taxable amount they are liable to repay to a taxpayer (section 8). The state must notify the taxpayer in writing that the tax has been deducted and must pay the deducted amount to the Commonwealth. The Commissioner of Taxation has the general administration of this Act and must provide an annual report to the Minister for presentation to Parliament (section 10). The Commissioner may also enter into arrangements with state authorities regarding the administration of the Act (section 11). Breaches of the Act can result in civil and criminal penalties. For instance, the Governor-General may make regulations prescribing penalties for offences against the regulations by way of fines of up to 10 penalty units (section 13). The Act also provides for the Commonwealth to pay an equal amount to the state whenever the state becomes liable to make a payment to the Commonwealth under section 8 (section 12). Failure to comply with the provisions of the Act, such as not withholding the windfall tax from taxable amounts or not remitting the deducted tax to the Commonwealth, could result in financial penalties and legal consequences for the state and the taxpayer.

Area of Law: Taxation Law
Instrument: Act
Concepts: Definitions & Interpretation; Liability to windfall tax; Collection; Regulatory Standards

Interactions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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