{"id":"C2004A05225","name":"Franchise Fees Windfall Tax (Collection) Act 1997","slug":"franchise-fees-windfall-tax-collection-act-1997","collection":"act","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":"132 of 1997","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":27217,"registerId":"commonwealth-C2004A05225-current","compilationNumber":null,"startDate":"2026-04-01","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Part 1","sectionType":"part","heading":"Preliminary","content":"## Part 1—Preliminary","sortOrder":0},{"sectionNumber":"1","sectionType":"section","heading":"Short title [see Note 1]","content":"#### 1 Short title \\[see Note 1\\]\n\n  This Act may be cited as the Franchise Fees Windfall Tax (Collection) Act 1997.","sortOrder":1},{"sectionNumber":"2","sectionType":"section","heading":"Commencement","content":"#### 2 Commencement\n\n  This Act is taken to have commenced on 5 August 1997.","sortOrder":2},{"sectionNumber":"3","sectionType":"section","heading":"This Act binds the Crown","content":"#### 3 This Act binds the Crown\n\n  This Act binds the Crown in each of its capacities.","sortOrder":3},{"sectionNumber":"4","sectionType":"section","heading":"Definitions","content":"#### 4 Definitions\n\n  (1) In this Act, unless the contrary intention appears:\n\n> Commissioner means the Commissioner of Taxation.\n\n> liable to repay has the meaning given by subsection (3).\n\n> State includes the Australian Capital Territory and the Northern Territory.\n\n> State franchise law has the meaning given by subsection (2).\n\n> windfall tax means the tax payable under this Act.\n\n  (2) The following are State franchise laws for the purposes of this Act:\n    (a) the Business Franchise (Liquor) Act 1993 of the Australian Capital Territory;\n    (b) the Business Franchise (Tobacco and Petroleum Products) Act 1984 of the Australian Capital Territory;\n    (c) the Business Franchise Licenses (Petroleum Products) Act 1987 of New South Wales;\n    (d) the Business Franchise Licences (Tobacco) Act 1987 of New South Wales;\n    (e) the Liquor Act 1982 of New South Wales;\n    (f) the Business Franchise Act 1978 of the Northern Territory;\n    (g) the Liquor Act 1978 of the Northern Territory;\n    (h) the Liquor Act 1992 of Queensland;\n    (i) the Tobacco Products (Licensing) Act 1988 of Queensland;\n    (j) the Business Franchise (Petroleum Products) Act 1979 of South Australia;\n    (k) the Liquor Licensing Act 1985 of South Australia;\n    (l) the Petroleum Products Regulation Act 1995 of South Australia;\n    (m) the Tobacco Products (Licensing) Act 1986 of South Australia;\n    (n) the Tobacco Products Regulation Act 1997 of South Australia;\n    (o) the Liquor and Accommodation Act 1990 of Tasmania;\n    (p) the Tobacco Business Franchise Licences Act 1980 of Tasmania;\n    (q) the Petroleum Products Business Franchise Licences Act 1981 of Tasmania;\n    (r) the Business Franchise (Petroleum Products) Act 1979 of Victoria;\n    (s) the Business Franchise (Tobacco) Act 1974 of Victoria;\n    (t) the Liquor Control Act 1987 of Victoria;\n    (u) the Business Franchise (Tobacco) Act 1975 of Western Australia;\n    (v) the Liquor Licensing Act 1988 of Western Australia;\n    (w) the Transport Co‑ordination Act 1966 of Western Australia.\n  (3) For the purposes of this Act, a State is liable to repay an amount to a person if:\n    (a) the State is liable to repay the amount to the person; or\n    (b) the State is required or permitted to offset the amount against other amounts that are owing, or may become owing, to the State by the person; or\n    (c) the State is required or permitted to apply the amount for the benefit of the person in any other way.","sortOrder":4},{"sectionNumber":"5","sectionType":"section","heading":"Administration","content":"#### 5 Administration\n\n  The Commissioner has the general administration of this Act.\n\n> Note: An effect of this provision is that people who acquire information under this Act are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1 to the Taxation Administration Act 1953.","sortOrder":5},{"sectionNumber":"Part 2","sectionType":"part","heading":"Liability","content":"## Part 2—Liability","sortOrder":6},{"sectionNumber":"6","sectionType":"section","heading":"Taxable amount","content":"#### 6 Taxable amount\n\n  (1) A taxable amount is any amount that meets all the following conditions:\n    (a) a State is liable to repay the amount to a person (the taxpayer) because a State franchise law is wholly or partly invalid because of section 90 of the Constitution;\n    (b) the amount is by way of repayment of an amount paid under the State franchise law before 5 August 1997 in respect of a licensing period commencing before 5 August 1997;\n    (c) the amount is claimed by the taxpayer from the State, or a court orders the State to pay the amount to the taxpayer.\n  (2) A taxable amount is reduced by deducting any part of it that a State would have been liable to repay even if the State franchise law were wholly valid.\n\n> Note: Example: An amount that is repayable solely because of an overpayment by the taxpayer would be deducted.","sortOrder":7},{"sectionNumber":"7","sectionType":"section","heading":"Reduction of taxable amount—liquor franchise fees","content":"#### 7 Reduction of taxable amount—liquor franchise fees\n\n  (1) If a taxable amount calculated under section 6 relates to a liquor franchise fee for which the licensing period ends after 6 August 1997, then the taxable amount is reduced by an amount calculated as follows:\n\n![](image.002.png)\n\n  (2) If:\n    (a) a State franchise law required or permitted the payment by instalments of a liquor franchise fee for a licensing period (the actual licensing period); and\n    (b) at least one of those instalments was payable after 6 August 1997;\n  then this section applies as if each of the following periods were a separate licensing period (in place of the actual licensing period):\n    (c) the period starting on the day on which an instalment was payable and ending immediately before the day on which the next instalment was payable;\n    (d) the period starting on the day on which last instalment was payable and ending at the end of the actual licensing period.\n  (3) In this section:\n\n> liquor franchise fee means a fee payable under a law specified in paragraph 4(2)(a), (e), (g), (h), (k), (o), (t) or (v).","sortOrder":8},{"sectionNumber":"8","sectionType":"section","heading":"Liability to windfall tax","content":"#### 8 Liability to windfall tax\n\n  (1) The taxpayer in respect of a taxable amount is the person to whom the State was liable to repay the taxable amount.\n\n> Note: Section 9 extinguishes the liability of the State to repay the taxable amount.\n\n  (2) The person who is the taxpayer in respect of a taxable amount is liable to pay windfall tax on the taxable amount.","sortOrder":9},{"sectionNumber":"Part 3","sectionType":"part","heading":"Collection","content":"## Part 3—Collection","sortOrder":10},{"sectionNumber":"9","sectionType":"section","heading":"State must withhold windfall tax from taxable amounts","content":"#### 9 State must withhold windfall tax from taxable amounts\n\n  State must withhold and remit windfall tax\n  (1) A State that is liable to repay a taxable amount must not repay or otherwise apply the taxable amount without first having deducted the tax on the taxable amount.\n  (2) As soon as practicable after making a deduction under subsection (1), the State must notify the taxpayer in writing that the deduction was made.\n  (3) A State that makes a deduction under subsection (1) must remit it to the Commissioner within 21 days after the end of the month in which the deduction is made. The remitted tax must be accompanied by a statement that:\n    (a) sets out the amount deducted; and\n    (b) identifies the taxpayer.\n  State discharged from liability to account\n  (4) When a State makes a deduction from a taxable amount under subsection (1) (or purportedly under subsection (1)), the State is discharged from any liability to pay or account for the amount deducted to any person other than the Commissioner.","sortOrder":11},{"sectionNumber":"10","sectionType":"section","heading":"Taxpayer entitled to credit for amount deducted by State","content":"#### 10 Taxpayer entitled to credit for amount deducted by State\n\n  (1) When a State makes a deduction from a taxable amount under section 9 (or purportedly under section 9), the taxpayer is entitled to a credit equal to the amount deducted.\n  (2) However, the taxpayer is not entitled to a credit for any amount purportedly deducted under section 9 in relation to an amount paid under a valid State franchise law.\n  (3) The credit is a debt due to the taxpayer by the Commissioner on behalf of the Commonwealth.\n  (4) The Commissioner may apply some or all of the credit against the taxpayer’s liability to windfall tax (whether or not that liability is in respect of the taxable amount that gives rise to the credit). The Commissioner must refund any amount not applied.","sortOrder":12},{"sectionNumber":"11","sectionType":"section","heading":"Regulations for collection etc. of unpaid windfall tax","content":"#### 11 Regulations for collection etc. of unpaid windfall tax\n\n  The regulations may provide for the collection and recovery of any unpaid windfall tax. In particular, the regulations may:\n    (a) prescribe the time when windfall tax is due for payment; and\n    (b) prescribe penalties for late payment of windfall tax (not exceeding an amount calculated at the rate of 20% per annum).\n\n> Note: Windfall tax would normally be collected under section 9.","sortOrder":13},{"sectionNumber":"Part 4","sectionType":"part","heading":"Miscellaneous","content":"## Part 4—Miscellaneous","sortOrder":14},{"sectionNumber":"12","sectionType":"section","heading":"Annual report","content":"#### 12 Annual report\n\n  After the end of each financial year, the Commissioner must give a report to the Minister, for presentation to the Parliament, on the operation of this Act during the year.","sortOrder":15},{"sectionNumber":"13","sectionType":"section","heading":"Arrangements with States","content":"#### 13 Arrangements with States\n\n  (1) The Commissioner may make an arrangement with an appropriate officer or authority of a State about any matter in connection with the administration of this Act.\n  (2) In particular, an arrangement may relate to the Commissioner’s delegation of powers or functions under this Act or the regulations.\n\n> Note: Section 8 of the Taxation Administration Act 1953 contains the Commissioner’s delegation power.","sortOrder":16},{"sectionNumber":"14","sectionType":"section","heading":"Regulations","content":"#### 14 Regulations\n\n  (1) The Governor‑General may make regulations prescribing matters:\n    (a) required or permitted by this Act to be prescribed; or\n    (b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.\n  (2) In particular, the regulations may prescribe penalties for offences against the regulations by way of fines of up to 10 penalty units.","sortOrder":17}],"analysis":{"issue_detection":{"absurdities":[],"contradictions":[]},"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":false,"description":"The text of the Act itself defines its scope tightly: it applies to repayments of fees paid under the listed State franchise laws before 5 August 1997 where the State law is held wholly or partly invalid under section 90 of the Constitution, with special reduction rules for certain liquor fees (sections 4(2), 6 and 7). There is no text within the Act indicating that its scope was subsequently narrowed or broadened from an earlier version; therefore no change of scope from the instrument’s own stated scope is evident in the supplied text."},"complexity_factors":["Interplay with constitutional doctrine (section 90) determining when State franchise laws are invalid and thus generate taxable repayments (section 6(1)(a)).","Detailed temporal rules and retroactive scope: applicability limited to amounts paid before 5 August 1997 for licensing periods commencing before that date and separate treatment for licensing periods ending after 6 August 1997 (sections 2 and 6(1)(b); section 7).","Cross-jurisdictional list of specific State statutes in scope, requiring identification of which State law gave rise to the repayment (section 4(2)).","A statutory reduction formula for liquor franchise fees is embedded (section 7(1)) and an image of the formula is referenced, which adds practical complexity to computing the taxable amount.","Allocation rules for instalment payments treating instalment periods as separate licensing periods for reduction purposes (section 7(2)).","Withholding mechanics that shift collection to States, plus timing and reporting obligations (section 9(1)–(3)), and discharge of State liability on withholding (section 9(4)).","Credit mechanics allowing the Commissioner to apply credits and refund excess, and an exclusion of credits where deductions relate to valid State law payments (section 10).","Delegation and regulatory discretion: Commissioner may enter arrangements with States (section 13); regulations may set due dates, penalties and fines (sections 11 and 14), creating administrative variability.","Interaction with confidentiality rules noted in the Taxation Administration Act as referenced in the Act’s note (section 5 note)."],"plain_english_summary":"This Act imposes a federal \"windfall tax\" on specified State repayments to persons who paid fees under certain State franchise laws later held invalid. States must withhold the tax from repayments, remit it to the Commissioner (who administers credits and refunds), and are discharged for amounts remitted; taxpayers receive credit for withheld amounts. It operates retrospectively from 5 August 1997, includes special rules for liquor-fee repayments, and enables regulations for timing, penalties and administration."},"kimi_summary":{"content_quality":"ok","complexity_score":4,"scope_assessment":{"changed":false,"description":"This legislation appears to have maintained its original narrow scope. It was enacted specifically to tax refunds arising from the invalidity of state franchise fees following the High Court's 1997 decision in Ha v New South Wales (which struck down state franchise fees as unconstitutional). The Act targets only those specific refunds and does not appear to have expanded beyond this original purpose. The legislation is now largely historical given the time-bound nature of the refunds (limited to fees paid before 5 August 1997)."},"complexity_factors":["Relatively short statute (14 sections across 4 Parts)","Only 5 defined terms in section 4, though one definition ('State franchise law') contains a lengthy list of 23 specific state and territory statutes","Contains one mathematical formula in section 7 for calculating reduced taxable amounts for liquor franchise fees","Moderate cross-referencing between sections (e.g., section 6 defines taxable amounts used in sections 7-10)","Nested conditional logic in section 6(1) requiring three cumulative conditions to be met for an amount to be taxable","Section 4(3) contains a three-pronged definition of 'liable to repay' with alternative conditions (a), (b), and (c)","Simple administrative framework with clear obligations on States to withhold and remit tax"],"plain_english_summary":"**What this law does:**\n\nThis Act creates a special federal tax called the \"windfall tax\" that applies when Australian states or territories have to repay money to businesses for franchise fees that were collected illegally.\n\n**Background:**\nIn 1997, the High Court ruled that certain state franchise fees (taxes on liquor, tobacco, and petroleum products) were **unconstitutional** (invalid under Australia's founding legal document). This meant states had to refund billions of dollars to businesses that had paid these fees. The federal government saw this as an unexpected \"windfall\" for those businesses and passed this law to tax those refunds.\n\n**Who it affects:**\n- **Businesses** that paid franchise fees to states for liquor, tobacco, or petroleum licenses before August 1997, and who are now entitled to refunds because those state laws were invalid\n- **States and territories** that must withhold the federal tax from any refunds they pay out, and send that money to the Australian Taxation Office instead\n\n**How it works:**\n- When a state owes a business a refund because a franchise fee was unconstitutional, the state must **deduct the windfall tax** from that refund before paying the business\n- The state sends the deducted tax to the federal Commissioner of Taxation\n- The business gets a **credit** for the amount withheld, which they can use against their tax liabilities or claim as a refund\n- The tax only applies to refunds for fees paid before 5 August 1997\n- There's a special reduction formula for liquor franchise fees where the licensing period extends past August 1997\n\n**Why it matters:**\nThis was a controversial revenue grab by the federal government. Instead of letting businesses keep their full refunds from unconstitutional state taxes, the Commonwealth effectively intercepted a portion of those refunds through this federal tax. It was a way for the federal government to capture revenue that states could no longer legally collect."},"summary":{"complexity_score":6,"scope_assessment":{"changed":false,"description":"The Act appears to have remained tightly focused on its original intent: capturing as federal tax any refunds flowing from the High Court's invalidation of State franchise fee laws. The enumerated list of State laws, the fixed date of 5 August 1997, and the narrow definition of 'taxable amount' all suggest the scope did not expand beyond what was originally intended as an emergency fiscal response measure."},"complexity_factors":["Retrospective commencement (backdated to 5 August 1997) raises legal interpretation issues","Interaction between federal constitutional law (s.90 of the Constitution) and State/Territory legislation requires background knowledge to understand","23 separate named State and Territory laws are referenced, requiring cross-jurisdictional awareness","The windfall tax effectively operates as a 100% tax on refunds, but this is not stated explicitly — it must be inferred from the structure","Special reduction formula for liquor franchise fees (section 7) references an image rather than spelling out the calculation in text, making it opaque without the formula","The instalment-splitting mechanism in section 7(2) creates complex deemed licensing periods","Multi-step credit and offset mechanism in section 10 adds procedural complexity","The broad definition of 'liable to repay' (including offsets and benefits applied on behalf of the taxpayer) widens scope beyond plain meaning","The Act binds the Crown in all capacities, with significant intergovernmental implications"],"plain_english_summary":"## Franchise Fees Windfall Tax (Collection) Act 1997\n\n### What is this about?\n\nIn August 1997, the High Court of Australia made a landmark ruling that State-based **franchise fee laws** — which charged businesses like fuel retailers, tobacco sellers, and liquor licensees a fee to operate — were actually **unconstitutional** (invalid under the law). This meant those businesses had potentially overpaid fees they were never legally required to pay, and the States would ordinarily have had to refund all of that money.\n\nThis Act steps in to **capture those refunds as a federal tax** before the money reaches the businesses. In other words: if you overpaid franchise fees to a State government before 5 August 1997, and that State was going to pay you back because the law was found to be unconstitutional, the Commonwealth says *\"not so fast — we're taxing that refund at 100%\"*.\n\n### Who does this affect?\n\n- **Businesses** that paid franchise fees under any of 23 named State and Territory laws covering liquor, tobacco, and petroleum products — across all States and Territories.\n- **State and Territory governments**, who are required to withhold the tax from any refund before paying it out, then send it to the federal Tax Commissioner.\n\n### How does it work in practice?\n\n1. A business claims a refund from a State (or a court orders a refund).\n2. The State **deducts the tax** from the refund before handing it over.\n3. The State sends the deducted amount to the **Australian Tax Office (ATO)** within 21 days of the end of that month.\n4. The business gets a **credit** for the amount withheld — which can be offset against any windfall tax they owe. Any leftover credit is refunded.\n\n### Special rule for liquor licence fees\n\nIf a liquor licence fee covered a period that extended **past 6 August 1997**, the taxable refund is reduced proportionally — you only pay the windfall tax on the portion of the fee that related to the period *before* the High Court decision.\n\n### The bottom line\n\nThis law was a rapid Commonwealth response to prevent a massive flow of money back to businesses from State governments. The Commonwealth essentially taxed away the refunds at 100%, meaning most affected businesses received little or nothing back despite having paid fees under laws later found to be invalid. It applies retrospectively to 5 August 1997."}},"importantCases":[],"_links":{"self":"/api/acts/franchise-fees-windfall-tax-collection-act-1997","history":"/api/acts/franchise-fees-windfall-tax-collection-act-1997/history","analysis":"/api/acts/franchise-fees-windfall-tax-collection-act-1997/analysis","conflicts":"/api/acts/franchise-fees-windfall-tax-collection-act-1997/conflicts","importantCases":"/api/acts/franchise-fees-windfall-tax-collection-act-1997/important-cases","documents":"/api/acts/franchise-fees-windfall-tax-collection-act-1997/documents"}}