Explanatory Memorandum
(Circulated by the authority of the Attorney-General, the Hon. R.J. Ellicott, Q.C., M.P.)Notes on Clauses
Clause 1 : Short title and citation
This clause formally provides for the short title and citation of the amending Act.
Clause 2 : Commencement
Section 5(1A) of the Acts Interpretation Act 1901 provides that every Act shall come into operation on the twenty-eighth day after the day on which the Act receives the Royal Assent, unless the contrary intention appears in the Act. By this clause it is proposed that the amending Act shall come into operation on a date to be fixed by Proclamation, not being earlier than the day that will be the commencing day for the purposes of the Federal Court of Australia Act 1976.
Clause 3 : Jurisdiction of Territory Supreme Courts and transfer of proceedings
As explained in the introductory note, the Supreme Courts of the Australian Capital Territory and the Northern Territory do not at present have jurisdiction in income tax appeals, although they do have jurisdiction in taxation prosecutions. (They also have jurisdiction in taxation appeals under other Commonwealth taxation legislation.)
Clause 3 proposes to insert two new sections - 184A and 184B - in the Principal Act in order to confer jurisdiction in income tax appeals on the Territory Supreme Courts. The jurisdiction will only extend however to the circumstances specified in the proposed section 184B. The purpose of these limitations is to ensure that, in any appeal, a clear nexus exists between the taxpayer and the Territory concerned. For an individual, other than in the capacity of trustee, jurisdiction will exist if at the time the proceeding is instituted, or during part or all of the year to which the assessment relates, the person was ordinarily resident in the particular Territory. The test for a company, other than in the capacity of a trustee, is the existence of its principal place of business in the particular Territory at either of the specified times. For trustees, jurisdiction will exist if, in broad terms, the property of the trust, at any time during the year of income to which the assessment relates, included assets in the particular Territory.
Clause 3 also proposes to insert a new section 184C into the Principal Act which provides that a Supreme Court may, upon the application of a party to a taxation appeal, transfer the proceeding to another Supreme Court and that the appeal shall then proceed as if it had been originally instituted in the Court to which it is transferred. This will be of convenience to a taxpayer who, having filed an appeal in one State, changes residence to another State.
Clause 4 : Application for appeal or review
In conjunction with the conferring of jurisdiction on the Territory Supreme Courts proposed in clause 3, this clause proposes to amend section 187 of the Principal Act so as to enable a taxpayer to appeal to a Territory Supreme Court.
Clause 5 : Appeal or reference to the Supreme Court
Section 196 of the Principal Act gives a taxpayer or the Commissioner the right to appeal to a Supreme Court of a State from any decision of a Board of Review which involves a question of law. The section also provides that a Board of Review shall refer to the Supreme Court of a State any question of law arising before it if requested to do so by the taxpayer or the Commissioner. The decision of the Supreme Court on such an appeal is final unless leave to appeal is granted by the High Court.
Clause 5(1) proposes the repeal of the present section 196 and the substitution of a new section 196 with the effect that appeals under the section may be heard by a single Justice of a Territory Supreme Court as well as of a State Supreme Court.
The proposed new section 196 also provides that an appeal may be made from a decision of a Supreme Court in cases falling within the scope of the section, but only in the following circumstances:
- (a)
- to the Federal Court, if that Court grants leave; or
- (b)
- to the High Court, if that Court grants special leave.
Clause 5(2) is a transitional provision which specifies that the amendments to section 196 proposed by clause 5(1) do not affect appeals to the High Court instituted before the new section comes into operation (see note on clause 2 of the Bill).
Clause 6 : Practice and procedure of Supreme Courts
Clause 6 proposes to amend section 196A of the Principal Act so as to provide statutory authority for the adoption, so far as is practicable, by the Territory Supreme Courts of the High Court Rules in income tax proceedings.
Clause 7 : Constitution of Court on appeal
Section 197 of the Principal Act provides that where, at the request of a taxpayer, the Commissioner has treated an objection as an appeal and forwarded it to the Supreme Court of a State, the appeal shall be heard by a single Justice of the Court.
This clause proposes the deletion from this section of the reference to "the Supreme Court of a State" and the substitution of the words "a Supreme Court". The clause thus gives effect to the proposal contained in clause 3 to confer jurisdiction upon the Territory Supreme Courts.
Clause 8 : Case stated to the Federal Court of Australia
Where a taxpayer requests the Commissioner to treat an objection as an appeal and to forward it to a Supreme Court, that Court may state a case in writing for the High Court upon any question of law arising on the appeal. This is provided for in section 198 of the Principal Act.
Clause 8(1) proposes to repeal this section and replace it with a new section 198 which will allow a Supreme Court to state a case for the opinion of a Full Court of the Federal Court.
Clause 8(1) also proposes to repeal sections 199 and 200 of the Principal Act and replace them with new sections 199 and 200. The proposed section 199 substantially re-enacts the existing section 199 of the Principal Act in providing that a Supreme Court hearing an appeal under section 197 may make such order as it thinks fit.
Section 200 of the Principal Act at present provides that a taxpayer or the Commissioner may appeal from a decision of the Supreme Court to the High Court where the taxpayer has originally requested the Commissioner to treat an objection as an appeal and forward it to the Supreme Court. The proposed section 200 provides that in such circumstances, the taxpayer or the Commissioner may only appeal as of right to the Federal Court. However the proposed section continues to allow an appeal to lie from a Supreme Court to the High Court, but in such a case, special leave to appeal must be obtained from that Court.
Like clause 5(2), clause 8(2) is a transitional provision which proposes that the amendments proposed by clause 8(1) do not affect the hearing of cases stated or appeals to the High Court instituted before the date on which the amending legislation comes into force.
Clause 9 : Taxation prosecutions
Clause 9(1) proposes to amend section 233(1) of the Principal Act so as to provide that a "taxation prosecution", which is defined in that Act as a proceeding by the Crown for the recovery of a pecuniary penalty, may be instituted in the name of the Commissioner only in the Supreme Court of any State or Territory. The effect of this clause, and of clauses 10 and 11, is to remove the original jurisdiction of the High Court in taxation prosecutions.
Clause 9(2) is a transitional provision which states that the amendment proposed by clause 9(1) does not affect the hearing of taxation prosecutions instituted in the High Court before the date on which the amending legislation comes into force.
Clause 10 : Defendant to have right of trial in Supreme Court and mode of trial
Proposed clause 10 repeals sections 234 and 235 of the Principal Act and inserts new sections 234 and 235.
The proposed new section 234 substantially re-enacts the existing section, while removing the jurisdiction of the High Court. It provides that, where a taxation prosecution has been instituted in a court of summary jurisdiction and the penalty sought to be recovered is in excess of $500, then the defendant may, within seven days after service of process, elect to have the case tried in the Supreme Court of the State or Territory in which the prosecution has been instituted. The amount specified in the existing section is $200. It is proposed to increase this to $500, as that amount generally accords with the ordinary limits of civil jurisdiction imposed on courts of summary jurisdiction.
The proposed new section 235 substantially re-enacts section 235 of the Principal Act, but removes the jurisdiction of the High Court.
Clause 11 : Prosecution in accordance with practice rules
In accordance with clause 9, clause 11 proposes to amend section 237 of the Principal Act in consequence of the removal of High Court jurisdiction in taxation prosecutions.
Clause 12 : Regulations
Section 266 of the Principal Act gives the Governor- General power to make regulations under that Act. Clause 12, which complements the amendments proposed to section 196A by clause 6, gives authority to the Governor-General to make regulations in relation to the practice and procedure of the Territory Supreme Courts in respect of proceedings to which section 196A applies. The proposed amendment is in accordance with the proposal in clause 3 to confer jurisdiction on the Territory Supreme Courts in taxation appeals.