What now, Mr. Commissioner!!Back to the drawing board?

Impact of the High Court’s Decision in Vanderstock.

A cartoon depicting the elephant in the room at the Queensland Revenue Office

Vanderstock v Victoria [2023] HCA 30 (18 October 2023) has seen the High Court rule by a 4:3 majority that the Victorian electric vehicle road user charge levied under the Victorian Zero and Low Emission Vehicle Distance-Based Charge Act 2021 (Vic) is unconstitutional and therefore invalid as it imposed a ‘duty of excise’ as prohibited by section 90 of the Constitution. Vanderstock extends the scope of s. 90 of the Constitution to taxes on the use or consumption of goods after they reach the hands of a consumer.*

The Court’s decision in Vanderstock has expanded the scope of taxes that can only be levied by the Commonwealth Parliament to the exclusion of the states. The majority of the High Court justices are of the view that the Commonwealth Parliament has exclusive legislative power to impose taxes that are properly characterised as a ‘tax on goods’.

So, now we have the proposition that any state tax which is properly characterised as a ‘tax on goods’, under the tests laid down by the Court, is unconstitutional and therefore invalid. What effect this decision will have remains to be seen. But the view is widespread that this decision is likely to have broad repercussions for the tax base of the states and the commonwealth – state distribution of taxation powers. Well, it may be that this case will be a short term wonder with lots of hype, but we’ll see.

There is no shortage of speculation about how (if any) it will affect non-Commonwealth taxes. So far as duties levied under the Duties Act 2001 (and its counterpart acts in other jurisdictions) are concerned, there is in the dissenting judgements of the minority warnings that taxes such as the following could come within the expanded scope of s.90 based on the reasoning of the Vanderstock majority (see [437] and [785). For example,

  • duties paid on the transfer of goods where transferred with land or businesses (eg plant and equipment, or trading stock in the case of Queensland)
  • motor vehicle duties and vehicle registration charges
  • commercial passenger vehicle levies
  • gaming machine levies and ‘point of consumption’ betting taxes
  • waste disposal levies
  • tobacco licensing fees
  • payroll tax; but see Aymsheen Pty Ltd v Chief Commissioner of State Revenue [2023] NSWSC 1237 (5 October 2023)
  • industrial land tax
  • licences to carry on a business where the business concerned the production or manufacture of goods
  • a tax concerning the carriage of goods
  • taxes on a gift of goods or an inheritance of goods.

In the meantime, the question for the revenue offices is: “What are you going to do about it?”

TTR has asked the QRO:

  • Will the QRO purport to distinguish the facts/ratio of the case and ignore it?
  • What will be the impact of the QRO doing so?
  • Will the QRO follow the ratio?
  • What will be the impact of the QRO doing so?
  • Will the QRO make provision for a High Court case to declare a particular state tax (taxes) invalid?
  • What happens to claims for refunds?
  • How does the QRO see this case impacting current commonwealth – state financial arrangements?
  • Will the QRO issue some sort of advice to the community on these and other questions?
  • Will the QRO issue that advice urgently so that taxpayers know what the QRO expects of them?
  • And, importantly, will the QRO throw all of issues to open, transparent, widespread consultation.

TTR will publish any answers in a forthcoming Issue.