Fortescue Metals Group Limited v The Commonwealth [2013] HCA 34

Fortescue Metals Group Limited v The Commonwealth [2013] HCA 34

The Minerals Resource Rent Tax legislation does not discriminate between States or parts of States nor give preference to one State over another, as any differences in MRRT liability result from varying State royalty regimes, not from the structure or operation of the Commonwealth law. The MRRT Act applies a uniform tax rate and operates generally, and its allowance for State royalties is functionally similar to other business expense deductions. Additionally, the legislation does not impose a special burden directed at States which would impair their governmental functioning, nor does it contravene s 91 of the Constitution. Consequently, the constitutional challenges fail.

Parties
Plaintiffs: Fortescue Metals Group Limited & Ors; Defendant: The Commonwealth of Australia; Intervener: Attorney-General of the State of Queensland; Intervener: Attorney-General for the State of Western Australia
Jurisdiction
Australia
Judgment Date
07 August 2013
Procedural Posture
Constitutional Challenge (original Jurisdiction) / Determination of Reserved Constitutional Questions by Full Court
Outcome
Plaintiffs' constitutional challenge dismissed; reserved questions answered in favour of the Commonwealth.
Legal Topics
Section 51(ii) Discrimination, Section 99 Preference, Melbourne Corporation Doctrine, Section 91 Aid or Bounty, Commonwealth Taxation Powers, Minerals Resource Rent Tax
Constitutional Law Tax Law Section 51(ii) Discrimination Section 99 Preference Melbourne Corporation Doctrine Section 91 Aid or Bounty Commonwealth Taxation Powers Minerals Resource Rent Tax

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Parties

Fortescue Metals Group Limited & Ors

Plaintiffs

The Commonwealth of Australia

Defendant

Attorney-General of the State of Queensland

Intervener

Attorney-General for the State of Western Australia

Intervener

Procedural Posture

Constitutional Challenge (original Jurisdiction) / Determination of Reserved Constitutional Questions by Full Court

Legal Issues

  1. 1 Does the Minerals Resource Rent Tax legislation discriminate between States or parts of States contrary to s 51(ii) of the Constitution?
  2. 2 Does it give preference to one State over another contrary to s 99?
  3. 3 Does it so burden or discriminate against the States as to be beyond Commonwealth legislative power (Melbourne Corporation doctrine)?

Ratio Decidendi

The Minerals Resource Rent Tax legislation does not discriminate between States or parts of States nor give preference to one State over another, as any differences in MRRT liability result from varying State royalty regimes, not from the structure or operation of the Commonwealth law. The MRRT Act applies a uniform tax rate and operates generally, and its allowance for State royalties is functionally similar to other business expense deductions. Additionally, the legislation does not impose a special burden directed at States which would impair their governmental functioning, nor does it contravene s 91 of the Constitution. Consequently, the constitutional challenges fail.

Court Disposition

Plaintiffs' constitutional challenge dismissed; reserved questions answered in favour of the Commonwealth.

Orders

  • Questions reserved answered No to discrimination/preference/invalidity grounds (s 51(ii), s 99, Melbourne Corporation doctrine, s 91).
  • Plaintiffs directed to pay the costs of the reserved questions.