In giving the recent 8th Annual Tax Lecture at the University of Melbourne, the Hon Justice Gordon of the Federal Court spoke on “The Commonwealth’s taxing powers and its limits – Are we there yet?“. Among other things, she discussed the concept of retrospective tax legislation. Some of the points made by Gordon J included:
- It is generally accepted that a law with respect to taxation is not properly characterised as a law with respect to the acquisition of property within the meaning of s 51(xxxi) of the Constitution. However the principle is properly identified, she said the retrospective alteration of taxation liabilities may reach a point where some question of the acquisition of property arises. [Such that it cannot be acquired other than on ‘just terms’.]
- Retrospective legislation, which removes substantive rights has long been recognised as “moving the goal posts after the kick was taken”. Her Honour said courts had traditionally been reluctant to construe legislation to have retrospective operation “without the clearest parliamentary direction”. [It may get to the point where the retrospective operation means that the tax is becomes arbitrary – and unconstitutional for that reason.]
- While US Fifth Amendment jurisprudence concerning retrospective legislation has been rejected in Australia, Gordon J suggested there was arguably scope for such an approach. She suggested the question was “can, or should, the United States approach be adopted in Australia in relation to retrospective legislation purportedly passed in the exercise of the Commonwealth’s taxing power?”.
- Her Honour said if the Commonwealth’s position is that taxpayers should order their affairs subject to the Commonwealth’s overriding right to subsequently enact retrospective legislation at a time and of a kind of its choosing, “then it will face scrutiny”.
[LTN 169, 31/8]