The Treasurer refers to me, for advice, the following minute by the Secretary to the Treasury:

The High Court having ruled that receipts for salaries given by Commonwealth officers are not subject to stamp duty, it should, I think, now be decided whether Commonwealth instruments generally are liable to State taxation. Stamp duty has been paid on bank drafts and on instruments requiring registration, it having been arranged with the State Premiers that such payments should be considered as provisional and that the amount should be refunded, if the High Court decided that the documents were exempt from taxation.

Perhaps it might be thought advisable to ask the Premiers of the various States if their Law Officers were satisfied that the late decision covered the matter. It is desirable that the matter should be settled in such a manner that the banks would not be called upon to contest it.

The decision of the High Court referred to is D'Emden v. Pedder 1 C.L.R. 91. In that case a State Act, requiring a duty stamp to be affixed to receipts for money, was construed not to apply to a receipt given by a Federal officer for his salary-such receipt being required by Commonwealth law and by departmental practice to be given; and it was held that the State Act, if construed to apply to such receipts, would have been pro tanto invalid.

Broadly speaking, the ground of the decision was that the Act, assuming it to apply, would interfere with or control the action of a Federal officer in the discharge of his duty to the Commonwealth.

I think that it follows logically from the decision that State stamp duty is not chargeable upon any transaction, or any instrument evidencing a transaction, to which the Commonwealth or any person in the performance of a duty to the Commonwealth is a party. Thus stamp duty would not be chargeable upon a Commonwealth cheque, or upon a conveyance or disposition of land by or to the Commonwealth.

Bank drafts, made by a bank, at the instance of the Commonwealth, upon a branch, or upon another bank or firm, are upon a somewhat different footing. The bank making the draft is not performing a duty to the Commonwealth imposed by law. It is a private commercial corporation, voluntarily performing services for the Commonwealth; and the draft itself is not directly an instrumentality [sic] of the Commonwealth. Neither the corporation nor the transaction appear to come within the rule laid down in McCulloch v. Maryland⁽¹⁾, and accepted by the High Court in D'Emden v. Pedder as applicable to the Commonwealth Constitution. I do not think that the decision in D'Emden v. Pedder covers the case of stamp duty upon bank drafts made by one bank upon another at the request of the Commonwealth; and I doubt whether the Court would extend the principle of the decision to that length.

Still I think on the latter as well as the other points it would be as well to obtain a definite judgment of the High Court, if it may be conveniently-in a proper case-and inexpensively obtained.

I also concur in the suggestion for preliminary communication with the State Premiers on this subject.

[Vol. 4, p. 346]

(1) 4wheat. 316.