Financial Emergency (State Legislation) Act 1932

Legislation au C1932A00011 Not in force Act

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Financial Emergency (State Legislation).

 

No. 11 of 1932.

An Act for the peace, order and good government of the Commonwealth with respect to Taxation, Insurance, Banking, Foreign Corporations and Trading or Financial Corporations formed within the limits of the Commonwealth, and other matters.

[Assented to 13th May, 1932.]

Preamble.

WHEREAS in view of the grave financial and economic emergency existing in Australia, it is necessary to protect the revenues and credit, and the financial and economic stability of the Commonwealth by temporary measures of an exceptional character:

Be it therefore enacted by the King’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—

Short title.

1. This Act may be cited as the Financial Emergency (State Legislation) Act 1932.

Definition.

2. In this Act, unless the contrary intention appears—

“Mortgage” includes—

(a) any deed, memorandum of mortgage, agreement, or instrument whatever whereby security for payment of money is granted over, or

(b) any equitable mortgage by deposit of title deeds or other instruments or papers of, or

(c) any charge for the securing of money (howsoever created) upon,

real or personal property or interest therein or any mortgage of or charge upon real or personal property or any estate or interest therein, whether real or personal property or estate or interest therein or such mortgage or charge forms the whole or part of the security.

State taxation on mortgages.

3.—(1.) Notwithstanding anything in any law of a State or anything done under any such law—

(a) a mortgage shall not be charged with any tax or impost; and


(b) a person shall not be liable to pay any tax or impost on any mortgage,

based on or measured by the principal amount secured by any mortgage, if the tax or impost is to a greater extent than the extent to which the mortgage or person would have been charged or liable under the laws of the State in force on the thirtieth day of April, One thousand nine hundred and thirty-two.

(2.) A forfeiture, alienation of interest under a mortgage, or other penalty or sanction imposed by or under any law of a State for non-payment or late payment of any such tax or impost shall not be valid or of any legal effect.

Capital levy under State law.

4. Notwithstanding anything in any law of a State, or anything done under any such law, a person shall not be liable to pay—

(a) any tax or impost in the nature of a capital levy on the whole or any part of his property; or

(b) any tax or impost based on or measured by the amount of his interest in the capital value of any property,

to an extent greater than the extent to which he was or would have been liable under the laws in force in that State on the thirtieth day of April, One thousand nine hundred and thirty-two, unless and until the Commissioner of Taxation for the Commonwealth, or some officer thereto authorized by him, has certified in writing that the payment of the tax or impost by that person will not unduly impair his capacity to pay any Commonwealth taxation payable by him or prevent, impede, or unduly impair the effective recovery of any Commonwealth taxation from him.

State taxation in relation to certain businesses and corporations.

5.—(1.) Where by or under any law of a State there is imposed a tax or impost in the nature of a capital levy, including a tax based on or measured by the principal amount secured by a mortgage, and it is resolved by both Houses of the Parliament—

(a) that the obligation of paying the tax or impost by—

(i) persons carrying on the business of insurance (other than State insurance not extending beyond the limits of the State concerned); or

(ii) persons carrying on the business of banking (other than State banking not extending beyond the limits of the State concerned); or

(iii) corporations carrying on the business of trustees or executors; or

(iv) other trading or financial corporations formed within the limits of the Commonwealth; or

(v) foreign corporations,

is such that its enforcement would prevent, impede, or seriously impair to the prejudice of the community the effective carrying on of the respective businesses and functions of those persons or corporations, or some of them, and would thereby endanger the financial and economic stability of the Commonwealth; and


(b) that a state of emergency has arisen; and

(c) that it is necessary that the persons or corporations aforesaid or any class or classes thereof therein specified in the Resolution should be relieved from that obligation,

the Governor-General may, by Proclamation, as from a date specified therein, (which date may relate back to the date of the original imposition of the tax or impost), relieve from that obligation the persons or corporations specified in the Proclamation, being some or all of the persons or corporations specified in the Resolution, and upon the issue of the Proclamation the persons or corporations specified in the Proclamation shall be relieved accordingly.

(2.) The relief afforded by any Proclamation issued under the last preceding sub-section—

(a) shall apply in relation to any obligation specified in the resolution in pursuance of which the Proclamation was issued thereafter arising or which arose prior to the issue of the Proclamation; and

(b) shall, notwithstanding any State law, whether passed before or after the commencement of this Act, continue and be in force in respect of any obligation which arose during or in respect of the period of the currency of the Proclamation,

and any such obligation shall by force of the Proclamation be fully and permanently discharged.

Duration of Act.

6. This Act shall continue in operation for a period of two years, and no longer.

 

Overview

The Financial Emergency (State Legislation) Act 1932 was enacted by the Parliament of Australia in response to a severe financial and economic crisis facing the nation. The Act aimed to provide the Commonwealth with the necessary tools to safeguard its revenues, credit, and financial stability through exceptional measures. The primary objective, as stated in the Act, was to ensure that the Commonwealth's financial and economic stability was not jeopardised by state-imposed taxes or levies, particularly those affecting mortgages, capital levies, and specific businesses and corporations. The Act granted the Commonwealth the authority to override state laws imposing taxes or levies that could hinder the effective functioning of essential services and businesses within the Commonwealth, ultimately protecting the nation's economic interests during a time of crisis.

Scope and Application

The Financial Emergency (State Legislation) Act 1932 is designed to address the grave financial and economic emergency in Australia through temporary measures of an exceptional character. This Act applies to all mortgages, including deeds, agreements, or instruments that provide security for the payment of money, and it prohibits any tax or impost on such mortgages that exceeds what was imposed under state laws as of 30 April 1932. It also prevents any forfeiture, alienation, or penalty for non-payment or late payment of such taxes. Additionally, the Act prevents individuals from being liable for taxes or imposts in the nature of a capital levy or those based on the amount of their interest in the capital value of any property, unless a Commonwealth Commissioner of Taxation certifies that such payment would not unduly impair the individual's ability to pay Commonwealth taxes or impede their recovery. Furthermore, the Act allows the Governor-General to relieve certain businesses and corporations from state taxes if a resolution is passed by both Houses of the Parliament, determining that enforcement would endanger financial and economic stability. This relief extends to obligations arising before or after the Proclamation and is in force for the duration of the Proclamation. The Act is limited in operation to a period of two years from its commencement.

Key Provisions

The Financial Emergency (State Legislation) Act 1932 (hereafter referred to as the Act) establishes temporary measures to address the financial and economic crisis in Australia during its time of enactment. Section 1 provides the short title of the Act, while section 2 defines key terms, such as "mortgage," which includes various forms of security for the payment of money. Section 3 of the Act states that no tax or impost shall be charged on mortgages or persons based on the principal amount secured by any mortgage if the tax or impost exceeds the extent to which the mortgage or person would have been charged or liable under state laws in force on April 30, 1932 (subsection 3(1)). Furthermore, section 3(2) invalidates any forfeiture, alienation of interest under a mortgage, or other penalty or sanction imposed by or under any state law for non-payment or late payment of any such tax or impost. The Act also prohibits individuals from being liable to pay any tax or impost in the nature of a capital levy on their property or based on the amount of their interest in the capital value of any property to an extent greater than their liability under state laws in force on April 30, 1932 (section 4). This protection only applies unless the Commissioner of Taxation for the Commonwealth, or an authorized officer, has certified in writing that the payment of the tax or impost will not unduly impair the individual's capacity to pay any Commonwealth taxation or prevent, impede, or unduly impair the effective recovery of any Commonwealth taxation from them. Section 5 of the Act allows the Governor-General to relieve certain persons or corporations from their obligation to pay a tax or impost in the nature of a capital levy if it is determined that the enforcement of such tax or impost would prevent, impede, or seriously impair the effective carrying on of their respective businesses and functions, or endanger the financial and economic stability of the Commonwealth. This relief may be granted if both Houses of the Parliament resolve that a state of emergency has arisen and that it is necessary to relieve the specified persons or corporations from their obligation. Lastly, section 6 of the Act states that the Act shall continue in operation for a period of two years and no longer. The Act imposes specific obligations on individuals and corporations to protect them from excessive taxation during the financial emergency, and it grants the Governor-General the authority to relieve certain entities from their obligations if necessary. Failure to comply with the provisions of the Act may result in civil or criminal consequences, including penalties and imprisonment, as determined by the relevant state and federal laws in force at the time.

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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.