Opinion Number. 334



Key Legislation


The Secretary, Department of Home Affairs

The Borough Council, Stawell, has served upon the Postmaster of that town a demand for payment of rates in respect of the quarters occupied by him.

The quarters in question are the property of the Commonwealth and it is stated in the correspondence that the claim of the Borough Council is based on the decision of the Victorian Full Court in the case of Ferntree Gully Shire v. Johnston, and that other Councils in Victoria intend submitting similar claims for rates.

The Secretary, Department of Home Affairs asks for my opinion as to the liability of the Commonwealth in the matter.

The case of the Ferntree Gully Shire v. Johnston which is reported in [1909] V.L.R. 113, arose out of a claim made by the said Shire under the Victorian Local Government Acts, upon one Johnston, a school teacher in the employ of the Victorian Education Department, for payment of rates in respect of the residence which he occupied, and which was the property of the State. The Full Court held that where 'land the property of His Majesty' is occupied in any substantial degree for private purposes it is not 'used for public purposes', and does not fall within the exemption in section 249 (1) of the Local Government Act 1903. In that case the officer upon whom the claim for rates was made was an officer of the State, the residence in which he resided was the property of the State, and the Act empowering the imposition of taxation in the form of rates was an Act passed by the Parliament of the State.

In the case which has been submitted for advice, however, the officer upon whom the demand for rates has been served is an officer of the Commonwealth, and the residence in which he resides is the property of the Commonwealth.

By section 114 of the Constitution a State is forbidden, without the consent of the Parliament of the Commonwealth to impose any tax on any property of any kind belonging to the Commonwealth. In the case of the Municipal Council of Sydney v. The Commonwealth 1 C.L.R. 208, the High Court held that to levy a municipal rate upon Commonwealth property was to impose a tax within the meaning of the Constitution and that a municipal corporation cannot have any greater power of taxation than the State which created it, and that the Commonwealth was not liable to pay municipal rates declared in respect of certain Commonwealth property in Sydney. The Chief Justice in his judgment at p. 231 said:

It was pointed out in the argument that under the Sydney Act the municipal rates are not, as in some municipal Acts, . . . made a charge upon the land, but are a personal liability of the owner or occupier, and may be levied by distress upon the chattels found upon the land. But this distinction does not affect the substantial character of the imposition, which is a tax in respect of property. All such taxes primarily impose a personal liability upon individuals, and it is, in my opinion, immaterial whether the land does or does not itself become subject to a charge in the nature of an encumbrance. In either case the tax is in substance a 'tax on property' in the sense in which these words are commonly understood, and certainly in the sense in which they are used in sec. 114 of the Constitution.

The decision in the case of the Municipal Council of Sydney v. The Commonwealth (above) certainly applies to municipal rates in Victoria, more particularly so as rates under the Victorian Local Government Act are made charges upon the properties in respect of which they are declared.

I am of opinion therefore that no State local governing body in Victoria has power to declare rates in respect of any properties belonging to the Commonwealth and that the Commonwealth is not liable to the rate referred to in the papers.

[Vol. 7, p. 116]