Commonwealth v Queensland [1920] HCA 79

Commonwealth v Queensland [1920] HCA 79

Section 7(12) of the Queensland Income Tax Acts 1902-1920 had the legal effect of making interest from Commonwealth stock 'liable to income tax' contrary to s 52A of the Commonwealth Inscribed Stock Act 1911-1918, and was to that extent invalid. Section 52A is a valid exercise of the Commonwealth's power under s 51(iv) of the Constitution. The Attorney-General of the Commonwealth has standing to bring such a proceeding.

Parties
Plaintiffs: The Commonwealth and the Attorney-General for the Commonwealth; Defendants: The State of Queensland and the Commissioner of Income Tax (Queensland)
Jurisdiction
Australia
Judgment Date
06 December 1920
Procedural Posture
Original Action for Declaratory and Injunctive Relief / Full Court Judgment After Referral From Single Justice
Outcome
Declaration granted as to invalidity of s 7(12) of the Queensland Act insofar as it relates to Commonwealth stock interest; injunction not expressly granted.
Legal Topics
Prohibition of State Taxation of Commonwealth Stock Interest, Validity of State Income Tax Legislation, Validity of Commonwealth Legislation Under S51(iv) of Constitution, Jurisdiction of High Court for Declarations of Invalidity
Constitutional Law Taxation Law Federal State Relations Prohibition of State Taxation of Commonwealth Stock Interest Validity of State Income Tax Legislation Validity of Commonwealth Legislation Under S51(iv) of Constitution Jurisdiction of High Court for Declarations of Invalidity

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Parties

The Commonwealth and the Attorney-General for the Commonwealth

Plaintiffs

The State of Queensland and the Commissioner of Income Tax (Queensland)

Defendants

Procedural Posture

Original Action for Declaratory and Injunctive Relief / Full Court Judgment After Referral From Single Justice

Legal Issues

  1. 1 Whether s 7(12) of the Queensland Income Tax Acts 1902-1920 renders interest on Commonwealth stock liable to State income tax contrary to s 52A of the Commonwealth Inscribed Stock Act 1911-1918
  2. 2 Whether an action lies by the Attorney-General of the Commonwealth to seek a declaration of invalidity of State law
  3. 3 Whether s 52A of the Commonwealth Inscribed Stock Act 1911-1918 is valid under the Commonwealth's borrowing power

Ratio Decidendi

Section 7(12) of the Queensland Income Tax Acts 1902-1920 had the legal effect of making interest from Commonwealth stock 'liable to income tax' contrary to s 52A of the Commonwealth Inscribed Stock Act 1911-1918, and was to that extent invalid. Section 52A is a valid exercise of the Commonwealth's power under s 51(iv) of the Constitution. The Attorney-General of the Commonwealth has standing to bring such a proceeding.

Court Disposition

Declaration granted as to invalidity of s 7(12) of the Queensland Act insofar as it relates to Commonwealth stock interest; injunction not expressly granted.

Orders

  • Declaration that sub-s 12 of s 7 inserted in the Principal Act by s 4 of the Income Tax Act Amendment Act of 1920 is invalid in so far as it relates to income arising or accruing from Commonwealth debentures, stock, bonds, certificates or Treasury bills.
  • The State of Queensland and its Commissioner of Income Tax are restrained from acting on it as regards Commonwealth interest.