Academic journal article Melbourne University Law Review

The Commonwealth's Taxing Power and Its Limits - Are We There Yet?

Academic journal article Melbourne University Law Review

The Commonwealth's Taxing Power and Its Limits - Are We There Yet?

Article excerpt

[The Commonwealth's use of its taxing power affects not only Commonwealth, state and territory governments, commerce and industry but Australia's future. Consideration of the constitutionality of the exercise of that power by the Commonwealth is important; some would say essential Given that there are limits on the exercise of the taxing power, such a review will often provoke the question--have the limits of the power been reached? To understand the complex issues raised by the Commonwealth's use of its taxing power, it is necessary to identify the taxing power and to seek to identify its limits. Only then is it appropriate to review the Commonwealth's use of the power and to ask if the limits of the power have been reached and, if so, in what respects.]

CONTENTS

I   Introduction
II  The Taxing Power and Its Limits
III Why Is This Important?
IV  Some of the Considerations Relevant to a Challenge to
    the Exercise of the Commonwealth's Taxing Power

    A Either/Or Classification Appropriate?

    B Other Limitations?

      1 Acquisition of Property within the Meaning of
      Section 51(xxxi)?

      2 Retrospectivity--Length and Purpose?

      3 Arbitrariness?

V Application in Australia?

INTRODUCTION

The subject--the Commonwealth's taxing power and its limits--is broad and it is not limited to what the purists might call 'tax law'. I have never regarded myself as a 'tax lawyer'. My exposure to tax law was as a result of others.

One of those responsible for my being exposed to cases about taxation was Brian Shaw QC, an alumnus of Melbourne Law School and of the University of Oxford. (1) The prize in Corporate Taxation in the Melbourne Law Masters program is named in his honour. His contribution to the tax jurisprudence of this country from the 1960s was, and remains, significant. Shaw signed the roll of counsel on 3 April 1959. (2) His first appearance in the High Court was in October 1959. (3) His last appearance was in June 2006. (4) Over 45 years he appeared in more than 80 cases in the High Court that have been reported in the Commonwealth Law Reports. (5) His appearances in other courts are far too numerous to count. On the occasion of his last appearance in the High Court, the Court took the extraordinary but delightful step of referring not only to his length of practice but to 'acknowledg[e] with gratitude the assistance [he] provided over that period'. (6) That assistance extended to the areas of tax, constitutional law, trusts, equity, superannuation, and even criminal cases. (7) The list is as diverse as it is long. It was Shaw's intellectual grasp of these seemingly disparate areas of the law that ensured that he was, and remains, one of the leading intellectuals of this State and this nation. Shaw demonstrated that the areas in which he practised and appeared were not, in fact, distinct, or disparate, silos of law. It was his detailed understanding of, and reference to, other areas of the law and the wider world that marked his advice and advocacy. Advice and advocacy sought by government and by the corporate community. Advice and advocacy he provided to many groups and individuals, pro bono and without fanfare, (8) Brian Shaw was and remains an intellectual, mentor and friend. It is not possible to consider the Commonwealth's taxing powers and the implications of the exercise of that power without thinking of Brian Shaw.

The choice of subject was, of course, deliberate. The Commonwealth's use of its taxing power affects not only Commonwealth, state and territory governments, commerce and industry but Australia's future. Consideration of the constitutionality of the exercise of that power by the Commonwealth is important; some would say essential. Consideration of what are the limits to the exercise of the power is not some political exercise. Such a review (and any subsequent challenge) does no more than reflect a proper functioning democracy where one arm of the democracy--the judicial arm--acts as a check or balance on the political arm. …

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