A tax is a tax …

On 28 September 2011 the High Court handed down its decision in Roy Morgan Research Pty Ltd v Commissioner of Taxation [2011] HCA 35 (judgment; High Court summary).  The decision relates to the taxation power Constitution s51(ii) and the superannuation guarantee charge levied on an employer who fails to provide to all employees a prescribed minimum level of superannuation.

Roy Morgan sought to argue:

  1.  the charge was not a tax within the meaning of s51(ii) because it was not for a “public purpose” as per the test in Matthews v Chicory Marketing Board in that it confers a “private and direct benefit” on employees of those  employers who are required to pay charge (which should not be regarded as a public purpose); and
  2. There is no other Commonwealth head of power which could constitutionally support the superannuation guarantee charge.

Consistent with longstanding authority, the Court held unanimously that the receipt of funds into the Consolidated Revenue Fund established of itself that the superannuation guarantee charge was imposed for “public purposes”.  The fact that individual employees may thereafter receive enhanced superannuation benefits (and that these benefits are legally required and “linked” to the imposition of the charge in a way that was not present in Northern Suburbs General Cemetery ReserveTrust – which concerned the Training Guarantee Levy of the Hawke/Keating government)) does not negate the fact of payment to Consolidated Revenue  as being conclusive of the “public purposes” element of the Matthews test being satisfied.


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