The appellant challenged the constitutionality of s 69(1)(b) of the Taxation Administration Act 2001. That provision conditions a taxpayer's right of appeal to the Supreme Court from an objection decision by the Commissioner on the taxpayer first paying the disputed amount. The argument depended on a preliminary finding that the Commissioner's powers were judicial in nature. The Court of Appeal held that the powers were not judicial. It also rejected an argument that the provision impaired the institutional integrity of the Supreme Court.
Sofronoff P and Philippides JA and Douglas J
8 October 2018
In 2014 the respondent (“the Commissioner”) issued reassessment notices under the Land Tax Act 2010 which had the effect of substantially increasing the incidence of the land tax that was payable by the appellant (“WB Rural”). . In September 2014, WB Rural lodged an objection to those reassessments. . The objections were disallowed and the assessments were confirmed. .
Section 69(2) of the Taxation Administration Act 2001 provides a right of appeal to the Supreme Court from such a decision, but s 69(1)(b) provides that the section only applies if “the taxpayer has paid the whole amount of the tax and late payment interest payable under the assessment to which the decision relates”.
WB Rural sought a declaration from the Supreme Court that s 69(1)(b) of the Taxation Administration Act was beyond the legislative competence of the Queensland Parliament insofar as it purported to preclude the Supreme Court from reviewing the objection decision without WB Rural first having paid the amounts assessed. . The argument for invalidity ran as follows:
“(a) By certain provisions of [Taxation Administration Act], conferring power upon the Commissioner to make assessments and to determine objections to such assessments, the Queensland Parliament conferred judicial power on the Commissioner;
(b) A State Parliament cannot confer judicial power without also conferring a right of appeal to the State Supreme Court;
(c) The effect of the requirement conditioning the right of appeal upon the prior payment of the assessed tax is that Parliament has not provided a sufficient right of appeal;
(d) As a consequence, s 69 is invalid.” .
Bond J held that WB Rural's argument failed at the first hurdle, concluding that the Commissioner's powers to make the relevant decisions were not judicial powers. .
Court of Appeal
Judicial power argument
The core of WB Rural's argument in the Court of Appeal was:
“The making of a reassessment by the Commissioner involves a determination of existing duties – ie. the taxpayer’s liability for land tax. It also does something new by converting that liability into one that is payable. But this new aspect is so closely connected with the determination of the parties’ existing rights and duties that it does not warrant a different categorisation of the nature of the power involved. Further, the nature of the decision involved in creating the new duty is one that is made by reference to the application of existing standards, not the creation of new ones.” .
WB Rural argued that the amount of land tax for which a taxpayer is liable is governed by the terms of the Land Tax Act, and not by the Commissioner's statement in a notice of assessment of what that amount is. . It relied on s 7 of the Land Tax Act, which provides that “[a] liability for land tax for a financial year arises at midnight on 30 June immediately preceding the financial year”. . It argued that on the basis that the taxpayer already has a “liability for land tax”, the function of the Commissioner is merely to “quantify that pre-existing liability”, a task which was said to be no different from the quantification exercises that a court would undertake in determining an ordinary debt claim. .
Sofronoff P (with whom Philippides JA and Douglas J agreed) rejected the argument. His Honour held:
“The ‘liability for land tax’ referred to in s 7 of the [Land Tax Act] which is said to arise at midnight on 30 June immediately preceding the financial year, is a liability that exposes the taxpayer to the exercise of the Commissioner’s power. That power, which is coupled with the duty to exercise it, arises if ‘the Commissioner is satisfied a taxpayer has a liability for tax’. Upon exercise of the power to make an assessment, there are created new rights and duties.” .
Accordingly, his Honour held that it is the Commissioner's decision that creates a new liability, and that the Commissioner's powers are not judicial in nature. .
Institutional integrity argument
WB Rural also sought leave to amend its notice of appeal to add the following fresh ground:
“Section 69(1)(b) [of the Taxation Administration Act] is invalid because it confers on the Supreme Court a function that is incompatible with the institutional integrity of the Court, in that it confers a right of appeal which is only available to those with the means to pay the disputed tax and other amounts within 60 days of the Commissioner’s decision”. .
Sofronoff P refused leave to amend on the basis that the ground had no merit. .
In the result, the appeal was dismissed. .
M J Hafeez-Baig