Young & Anor v Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (John Young: 2011/3256-3264; John Lyon: 2011/3187-3195)
Judgment date: 28 May 2013
Date published: 28 October 2013

Summary of decision:
Outlines the ATO's response to this case which concerns whether the Surcharge Acts are constitutionally invalid in their application to two taxpayers who held senior positions in the Crown Solicitor's Office in Western Australia.

Overview of facts:
Both taxpayers held senior positions in the WA Crown Solicitors Office, and were members of Constitutionally Protected Superannuation Funds ('CPSFs'). During the relevant income years, both taxpayers were the Deputy Crown Solicitor (or acted in that capacity). | The CPSFs reported surchargeable contributions and the taxpayers were issued with Superannuation Contributions Surcharge ('SCS') assessments. Following the High Court decision in Clarke v Commissioner of Taxation [2009] HCA 33, the taxpayers lodged objections against the SCS assessments on the basis that they each held positions at the 'higher levels of government' during the relevant income years. | Issues decided by the court | Issue: | The issue determined by the Tribunal was whether the taxpayers were at the "higher levels of government" so that the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 ('Surcharge Acts') were constitutionally invalid in their application to those taxpayers. | Decision: | The Tribunal set aside the objection decisions for periods in which the taxpayers were the Deputy Crown Solicitor (or acting in that capacity), noting that they were at the higher levels of the WA Government. Following Clarke , legislation imposing the surcharge did not validly apply to them during those periods. | In deciding that the Surcharge Acts did not apply to the taxpayers in their role as Deputy Crown Solicitors, the Tribunal concluded that a number of factors specific to this role at the relevant time weighed in favour of a conclusion that the Surcharge Acts transgressed the implied constitutional limitation insofar as they applied to the taxpayers. | Deputy President Jarvis particularly emphasised that the taxpayers not only occupied higher positions in the structure of the Crown Solicitor's Office and were part of a small core group of the most senior advisers, but were not answerable to the Crown Solicitor, provided advice direct to Ministers, government officers and agencies, and were subject to salary fixing arrangements applying to chief executive officers of government departments.

Issues decided:
Issue:: The issue determined by the Tribunal was whether the taxpayers were at the "higher levels of government" so that the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 and the Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 ('Surcharge Acts') were constitutionally invalid in their application to those taxpayers. | Decision:: The Tribunal set aside the objection decisions for periods in which the taxpayers were the Deputy Crown Solicitor (or acting in that capacity), noting that they were at the higher levels of the WA Government. Following Clarke , legislation imposing the surcharge did not validly apply to them during those periods. In deciding that the Surcharge Acts did not apply to the taxpayers in their role as Deputy Crown Solicitors, the Tribunal concluded that a number of factors specific to this role at the relevant time weighed in favour of a conclusion that the Surcharge Acts transgressed the implied constitutional limitation insofar as they applied to the taxpayers. Deputy President Jarvis particularly emphasised that the taxpayers not only occupied higher positions in the structure of the Crown Solicitor's Office and were part of a small core group of the most senior advisers, but were not answerable to the Crown Solicitor, provided advice direct to Ministers, government officers and agencies, and were subject to salary fixing arrangements applying to chief executive officers of government departments.

ATO view of decision:
The partially adverse decision of the Tribunal does not impact on the Commissioner's current view that only a relatively restricted range of officials are to be considered to be at the 'higher levels of government' for these purposes. Each of these cases involved the application of established principle to particular facts and circumstances.

Administrative treatment:

Legislative references: Constitution Constitution Act 1934 (SA) Public Sector Management Act 1994 (WA) Salaries and Allowances Act 1975 (WA) Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Assessment and Collection Act 1997 (Cth) The Act Superannuation Contributions Tax (Members of Constitutionally Protected Superannuation Funds) Imposition Act 1997 (Cth) The Act Supreme Court Act 1935 (WA)
Case references: Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 Austin v Commonwealth [2003] HCA 3 215 CLR 185 2003 ATC 4042 51 ATR 654 Clarke v Commissioner of Taxation [2009] HCA 33 240 CLR 272 72 ATR 868 Deputy Commissioner of Taxation v State Bank of NSW (1992) 105 ALR 161 23 ATR 1 92 ATC 4079 Melbourne Corporation v Commonwealth (1947) 74 CLR 31 R v Commonwealth Conciliation and Arbitration Commission; Ex parte Association of Professional Engineers (1959) 107 CLR 208 Re Australian Education Union; Ex parte the State of Victoria (1995) 184 CLR 188 Re Walsh and Commissioner of Taxation [2012] AATA 451 Thomas v Mowbray (2007) 233 CLR 307 Victoria v Commonwealth (1971) 122 CLR 353 2 ATR 249 Re Somerville and Commissioner of Taxation [2013] AATA 348
Subject references: constitutional law superannuation contributions surcharge superannuation contributions tax