The Secretary to the Treasury has forwarded to me for advice a memorandum from the Secretary, Department of Works enclosing a copy of a memorandum from the Works Director for Queensland which reads as follows:

The Unemployment Relief Act which came into operation in Queensland on the 1st August, 1930, provides that Unemployment Relief Tax is payable by all employees irrespective of age, sex, occupation and whether or not such employees are paid in accordance with any award, or otherwise howsoever.

The question has been raised of whether employees of the Commonwealth are exempt. It is understood that the State authorities have entered into negotiations with the Federal Attorney-General regarding the liability of officers of the Commonwealth Public Service to pay the tax. Some doubt exists however as to whether the tax is to be paid by exempt employees of the Commonwealth. The Director of Labour has intimated that the State Government regards these employees as coming within the scope of the Act, a copy of which is enclosed.

I should be glad if you would please furnish me with advice as to the question raised and with any other information which might be considered to be relevant to the matter, as early as practicable.

In the meantime the amounts of tax payable under the Act are being deducted from wages payable to exempt employees, and placed to the credit of Trust Fund, Other Trust Moneys.

By section 8 of the Commonwealth Public Service Act, the Governor-General may declare that the Act does not apply to any officer or class of officers or employee or class of employees but the Public Service Board may, as prescribed, determine the rates of payment and conditions of employment of any such officer or class of officers or employee or class of employees.

By regulation 74 of the Public Service Regulations the Board may determine the rates of payment or conditions of employment of exempt employees, but where a determination of an Arbitration Court is applicable, the rates of pay and conditions of employment shall, unless otherwise determined by the Board, be those set forth in that determination.

It would therefore appear that exempt employees are employees of the Commonwealth who have been exempted from the provisions of the Commonwealth Public Service Act.

I am of opinion that exempt employees are, for the purposes of the Queensland Income (Unemployment Relief) Act, in the same position as officers under the Commonwealth Public Service Act.

The Queensland Act makes specific provisions in section 26 for the taxation of officers of the Commonwealth employed in Queensland. Such officers are required to render returns and are liable to be assessed for tax upon the returns so rendered. A specific rate of tax is provided subject to the limitation that in no case shall the taxation of an officer of the Commonwealth be at a higher rate or to a greater extent than is imposed on other salaries of the same amount in the State.

The Commonwealth Salaries Act 1907 declares that the taxation by a State, in common with other salaries within the State, of the official salaries of officers of the Commonwealth residing in the State shall not, if the taxation is not at a higher rate or to a greater extent than is imposed on other salaries of the same amount earned in the State, be deemed to be an interference with the exercise of any power of the Commonwealth or to be inconsistent with any act by or in pursuance of which the salary is fixed or made payable.

Section 26 makes specific provision to ensure that the tax upon the salaries of officers of the Commonwealth shall not be at higher rate or to a greater extent than that imposed upon other salaries earned within the State. Although the method of collection of tax upon the salaries of officers of the Commonwealth differs from the method of collection of tax upon other salaries I incline to the view that the salaries of Commonwealth officers are, by the Act, taxed ‘in common’ with other salaries.

In this connection I would point out, however, that the question whether the State Act is effective to impose tax upon the salary of any Commonwealth officer is one which concerns primarily the officer himself and not the Commonwealth.

For the reasons given above I am of opinion that exempt officers are officers of the Commonwealth within the meaning of section 26 of the State Act.

Inasmuch as specific provision has been made as to the assessment and taxation of officers of the Commonwealth, it is clear in my opinion that the Act does not purport to place upon the Commonwealth the obligation to collect and pay the tax in the manner contemplated by section 8 of the Act.

[Vol. 24, p. 670]