Opinion Number. 1521

Subject

taxation FINANCIAL EMERGENCY LEGISLATION: COMPULSORY CONTRIBUTIONS BY RELATIVES: WHETHER LAW IMPOSING TAXATION: SEPARATION OF IMPOSITION FROM OTHER PROVISIONS

Key Legislation

FINANCIAL EMERGENCY BILL 1932 cl 52M: FINANCIAL EMERGENCY ACT 1932: CONSTITUTION s 55

Date
Client
The Attorney-General

I understand that in the Senate early this morning Senator Colebatch(1) raised, both on the second reading of the Financial Emergency Bill and in Committee, the question of the inclusion in the Bill of Clause 52M which deals with compulsory contributions by relatives.

His objection is that this clause is in substance taxation and consequently offends against section 55 of the Constitution.

There was a full debate on the subject and eventually his objections were ruled out of order.

The third reading of the Bill is to be taken at 10 o’clock this morning, and the question arises as to whether the Bill will be allowed to go through in its present form, or whether it would be advisable to delete the clause now and embody it in a separate Bill. I fear that the publicity now given to this objection may lead to the Act being attacked in the High Court.

If it should be held by the High Court that the clause in question imposes taxation, the whole of the remainder of the Act would go–presumably the amending Financial Emergency Act (not the Invalid and Old-age Pensions Act as amended by the amending Financial Emergency Act).

I have promised Senate Ministers I would submit this matter to you, in order that they might know what course to take at 10 o’clock.

An amendment on the gold bounty provision was carried against the Government by one vote, so that the Bill will have to come back to the Representatives on that point.

I understand that the effect of the amendment is that any period during which bounty is suspended is excluded in considering the 10 year period for which the bounty is provided.

I enclose a copy of the Constitution.

Geo. S. Knowles

Solicitor-General

I have considered this question.(2)

The liability of a relative arises only after failure to make a voluntary contribution. Its existence and its extent are determined by the decision of a Court. After an examination of the authorities I have been unable to find any decision which supports the view that a liability conditioned, defined and enforced in this way constitutes a tax.

I cannot see any method of giving effect to such a view consistently with the line of judicial decisions in the High Court dealing with section 55. In ordinary taxation measures there is no difficulty in separating an Assessment Bill from a Rates Bill, e.g. land tax, income tax, estate duty, entertainments tax, sales tax.

As at present advised, I am unable to see any way of applying this hitherto generally recognised rule to the system of contributions from relatives embodied in the Financial Emergency Bill 1932.

[Vol. 25, p. 854]

(1) Sir Harry (Hal) Pateshall Colebatch (1872–1953). Senator for Western Australia (Nationalist Party) 1929–1933.

(2) Response by Attorney-General Latham to the advice of Mr Knowles.