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House of Representatives                                Ch 11                                                 p 423

Taxation bills

Strictly, taxation bills are those which impose a tax or charge in the nature of a tax. ¹ They cannot originate in, or be amended by, the Senate. ² The form of a bill in this class is governed by section 55 of the Constitution which provides that laws imposing taxation shall deal only with the imposition of taxation (to avoid what is known as ‘tacking’— see p.  409 ), and, except laws imposing duties of customs or of excise, shall deal with one subject of taxation only; laws imposing duties of customs shall deal with duties of customs only and laws imposing duties of excise shall deal with duties of excise only. Examples of taxation bills are income tax bills, customs tariff bills and excise tariff bills. Certain bills imposing fees may be considered as taxation bills if the fees involved are revenue raising measures rather than charges having a discernible relationship with the value of services rendered ( see below ).

Reflecting the requirements of the Constitution, parliamentary practice distinguishes between bills dealing with taxation, such as tax assessment bills, and tax bills. Tax assessment bills provide the means for assessing and collecting tax. Tax bills, which impose the burden upon the people, are the bills which have been regarded as imposing taxation, and are therefore not capable of originating in the Senate or of being amended by the Senate. This practice has been recognised by the High Court as carrying out the constitutional provisions on a correct basis. ³ It has also been reviewed and accepted by the House’s Standing Committee on Legal and Constitutional Affairs. ⁴

A former Chief General Counsel of the Attorney-General’s Department has advised that bills dealing with taxation can be further categorised as follows:

1. provisions imposing taxation;
2. other provisions dealing with the imposition of taxation (e.g. provisions removing or adding exemptions or deductions, increasing or reducing rates or otherwise defining a taxable amount); and
3. provisions not dealing with the imposition of taxation (e.g. provisions for the assessment, collection and recovery of tax and provisions providing for penalties). ⁵

It has been held by the High Court:

0. that Part VIII of the Customs Act 1901 , which dealt with the payment and computation of duties payable under the Customs Tariff, was not a law imposing taxation within the meaning of section 55 of the Constitution;
1. that the Act imposing taxation is not the Customs Act 1901-1910 (which is a Customs Regulation Act) but the Customs Tariff Act. To hold that a Customs Regulation Act was a law imposing taxation would deny the power of the Senate to originate or amend it;
2. that the Income Tax Assessment Act 1936-1939 was not a law imposing taxation within the meaning of section 55 of the Constitution;
3. that the Land Tax Assessment Act 1910 was not an Act imposing taxation within the meaning of section 55 of the Constitution. It is not every statute dealing with the imposition of taxation that is a taxing law. The Land Tax Assessment Act is certainly a law relating to taxation; that is, it deals with the imposition, assessment and collection of a land tax. That does not make it a law imposing taxation;
4. that the provisions of the Sales Tax Assessment Act (No. 2) 1930-1936 , imposing liability for an amount by way of additional tax in case of default, imposed penalties, not taxes, and did not make the Act a law imposing taxation; and
5. that the Sales Tax Assessment Act (No. 5) 1930-1953 was not a law imposing taxation and section 55 of the Constitution had no relation to it. ⁶

A Sales Tax (Exemptions and Classifications) Bill is not a bill imposing taxation within the meaning of section 55 of the Constitution as the bill merely states goods which are exempt and classifies others for the purpose of imposition of sales tax. ⁷ Such a bill may be amended by the Senate ⁸ and amendments to such legislation have been moved by private Members in the House of Representatives (provided they satisfy the requirements of the standing orders). ⁹

The High Court held in 1987 that:

. . . The test under the second paragraph of s. 55 in deciding whether the subject of taxation imposed by an Act is single is whether, looking at the subject matter which is dealt with as if it were a unit by Parliament, it can then, in the aspect in which it has been so dealt with, be fairly regarded as a unit, or whether it then consists of matters necessarily distinct and separate.

It considered that, in applying this test, weight should be given to Parliament’s understanding that the Act in question dealt with one subject of taxation only and that the Court should not resolve the question against Parliament’s understanding unless the answer was clear. ¹⁰ The decision in this case reflected the established division between a tax Act and an assessment Act, the former being the Act imposing the tax. In this the Court held that adding a new category of fringe benefit did not amount to the imposition of taxation.

The High Court, in holding that section 34 of the Migration Act 1958 , inserted by the Migration Amendment Act 1987 , was invalid, said that the provision (which concerned the imposition of charges on certain passengers travelling to Australia), although purportedly exacting a fee for immigration clearance, was to be characterised as a tax and that the provisions of the section were a law ‘imposing taxation’. It held that the expression ‘fees for services’ ‘should be read as referring to a fee or charge exacted for particular identified services provided or rendered individually to, or at the request or direction of, the particular person required to make the payment’. The Court held that section 55 required that both an amending Act imposing taxation and the amended principal Act deal only with the imposition of taxation and that it was not within the competence of Parliament to purport to insert by an amending Act a provision imposing taxation in an existing valid Act which contained provisions dealing only with other matters. ¹¹

The Court similarly ruled that provisions in the Copyright Amendment Act 1989 , amending the Copyright Act 1968 to provide for a scheme to raise a fund to compensate copyright owners, imposed taxation and were therefore invalid. ¹²

In the Northern Suburbs General Cemetery Reserve Trust v. The Commonwealth the High Court rejected a challenge to the Commonwealth’s training guarantee legislation. The Court again recognised the distinction between laws imposing taxation and those dealing with the imposition of taxation. ¹³

The traditional view, that the setting of rates or the increasing of taxation is not the imposition of taxation, was questioned in proceedings following the introduction of the Taxation (Deficit Reduction) Bill 1993. Contrary to previous practice, this bill introduced budget measures increasing a range of taxes, and including amendments to several principal Acts, in the one ‘omnibus’ bill. Nevertheless, the bill had been prepared with regard to the distinction recognised by the High Court between bills imposing taxation and those dealing with taxation, and the Chief General Counsel of the Attorney-General’s Department was of the view that, applying the reasoning expounded by the High Court, none of the provisions actually imposed taxation. The constitutional validity of the bill was however challenged in the Senate and the matter referred to its Standing Committee on Legal and Constitutional Affairs. The committee received conflicting evidence, but reported that in its view there was a real risk which was significant that the High Court would find the bill, if enacted, to be a law imposing taxation within the meaning of section 55 of the Constitution. ¹⁴ In response the Government, rejecting the report’s conclusions but to avoid uncertainty, withdrew the bill and replaced it with a package of eight separate bills. To allow the issue to be settled, one of the bills, the Taxation (Deficit Reduction) Bill (No. 2) 1993, was deliberately drafted as a test bill (by combining two minor rate increases involving different subjects of taxation) in order to facilitate a High Court challenge; ¹⁵ however, a challenge was not mounted.

In 2004 the High Court held that section 55 does not prevent the Commonwealth Parliament from combining provisions that impose taxation with (at least) provisions for the assessment, collection and recovery of taxation. ¹⁶

In practice the term is also sometimes used to describe bills which, while not actually imposing taxation, deal with taxation.

Constitution, s. 53.

Attorney-General’s Department, The Australian Constitution annotated , AGPS, Canberra, 1980, pp. 179-81.

PP 307 (1995) 104-5.

Advice dated 30 August 1993 re Taxation (Deficit Reduction) Bill 1993 (attachment).

The Australian Constitution annotated , pp. 179-81.

H.R. Deb. (23.11.60) 3183-92.

VP 1940-43/236-7; VP 1960-61/289.

VP 1940-43/227-8; VP 1993-95/2133-5.

State Chamber of Commerce and Industry v. Commonwealth of Australia (1987) 73 ALR 161-2 (the Second Fringe Benefits Tax Case).

Air Caledonie International v. The Commonwealth (1988) 165 CLR 462.

Australian Tape Manufacturers Association Ltd v. The Commonwealth (1993) 112 ALR 53.

Northern Suburbs General Cemetery Reserve Trust v. The Commonwealth (1993) 176 CLR 555.

Senate Standing Committee on Constitutional and Legal Affairs. Constitutional aspects of the Taxation (Deficit Reduction) Bill 1993 . PP 453 (1993).

H.R. Deb. (27.9.93) 1096.

Permanent Trustee Australia Limited v. Commissioner of State Revenue [2004] HCA 53, note drawn from Australian Government Solicitor summary of case (by Graeme Hill) Nov. 2004.