Superannuation guarantee Tax – Roy Morgan Research Pty Ltd v FCT 2011

Section 51 (ii) of the Constitution authorises the Commonwealth Government to make laws on taxation. It may be argued that the Commonwealth Government uses this power to encroach on areas of the economy that fall under State jurisdiction by imposing a tax if a person does not follow a Commonwealth rule that might be outside the Commonwealth’s constitutional power. Taxpayers could resist these imposts by arguing they are not taxes but levies. These are called “ultra vires” beyond the power of the Commonwealth Parliament.

Roy Morgan Research Pty Ltd v FCT [20110 HCA 35; 244 CLR 97; 80 ATR 1; 2011 ATC 20-282 (Full High Court)

Facts: The taxpayer in Roy Morgan was a market research company that argued its interviewers were independant contractors and not employees and, in the alternative, that in any case the superannuation guarentee charge was unconstitutional as it was not a tax but rather a charge to benefit employees.

Decision: The decision of the High Court turned on the meaning of a “tax” within the Constitution and whether the amounts paid to the Commonwealth were spent on ” purposes”. The definition of a tax then was “a compulsory exaction of money by a public authority for public purposes, enforceable by law”. 

Rulling: In favour of the tax: a tax does not cease to be valid merely because it regulates, discourages, or even definietely deters the activities taxed, even if the revenue obtained is negligible or the revenue purpose of the tax is of secondary importance. 

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