5.4.2 Disposition of ground 3
178 Ground 3 has not been established for the following reasons.
179 First, as the applicant accepted, it is clear from its terms that the discretion conferred by s 33 on the ACMA is intended to be a broad one. The only express limitations upon the discretion in s 33 itself concern the subject matter of any declaration, the persons in respect of whom such a declaration may apply, and the fact that a declaration may not apply to all participating persons. The width of the apparent discretion under s 33 of the ER Determination accords with s 47(2) of the TCPSS Act. Section 47(2) requires not only that the assessment of a participating person's eligible revenue must be based on the person's eligible revenue return, but also on "information and documents obtained by the ACMA because of its inquiries into the correctness of the return" and "any other information or documents that the ACMA has and that it thinks relevant to making the assessment". There is, in other words, no express limitation imposed upon the material to which the ACMA may have regard in making an eligible revenue assessment.
180 The intention to confer a wide discretion on the ACMA is supported by the extrinsic materials, as Axicom Land submitted. I have already referred to the intention of ensuring that the regulator, through the declaration powers, has the flexibility to adjust and fine tune what is included in eligible revenue given the novelty of the concept, the difficulties in foreseeing all of the situations which may arise in a rapidly changing industry, and practical experience accumulated by the regulator. That flexibility is particularly evident in s 33. Thus, not only is the discretion expressed in unconstrained terms, but it is evident that, as Axicom Land submitted, the discretion extended beyond merely clarifying amounts that can be deducted, to permitting amounts otherwise required to be included in eligible revenue to be deducted where the ACMA considers that appropriate.
181 Thus, as the ACMA stated in its October letter and Axicom Land accepted in its correspondence with the ACMA, the Explanatory Statement to the ER Determination explained that the discretion under s 33 "serve[s] two purposes - to clarify what can be deducted, and extend the scope of allowable deductions where appropriate". The second of these purposes was also identified in Explanatory Statement to the 1998 ER Regulations. Specifically, the commentary to regulation 22, which was the predecessor provision to s 33, explained that the question of whether amounts should be deducted from gross telecommunications sales revenue as they were not appropriately subjected to the levy involved potentially a number of different considerations:
Deductions from gross telecommunications sales revenue under Part 5 are designed to remove from the eligible revenue definition amounts that it would be inappropriate to subject to the USO levy. The main reason such deductions are allowed is to ensure that carriers are not disadvantaged when competing with persons not otherwise subject to the USO levy, for example, because they are non-carriers or carriers operating outside Australia. Other considerations are that revenue may be earned from activities which do not directly benefit from the USO (eg. the provision of content, operations outside Australia) or would involve a double levy (eg. levying USO payments).
182 Secondly, the fact that s 33 permits the ACMA to consider any matter consistent with the purposes of the ER Determination and the TCPSS Act, including reducing the possibility of tax avoidance, does not establish that the matters which Axicom Land says ought to have been considered were mandatory relevant considerations. Nor did Axicom Land identify any features in the text or structure of the ER Determination or the TCPSS Act which supported the proposition that the considerations to which it pointed - the objective of addressing avoidance and the fact that Axicom Land did not obtain any (financial) benefits from its carrier licence - were mandatory relevant considerations, or that other considerations to which the ACMA had regard were irrelevant considerations.
183 Thirdly, the evident intention to arm the ACMA with a broad flexible discretion to extend deductions from eligible revenue, based on its practical (and accumulating) experience in a rapidly changing industry, would not be furthered by imposing constraints upon those considerations which the ACMA may or may not take into account in the exercise of the s 33 discretion. In those circumstances, the applicant's construction must be rejected: see s 15AA of the Acts Interpretation Act, and Vincentia at [48] (Perry and Stewart JJ) (quoted at [96] above). There is no basis on which to imply that the ACMA was required to consider, as a condition of a valid or lawful exercise of the s 33 discretion, issues of tax avoidance or whether the participating person had earned any revenue from its carrier licence.
184 Fourthly, Axicom Land focused upon a passage in the Explanatory Statement to the ER Determination as the basis on which it submitted that tax avoidance was a relevant consideration in a jurisdictional sense. In that passage, the Explanatory Statement stated that the Determination:
addresses the possibility of avoidance by including in the calculation of eligible revenue the revenue of entities 'related' to a participating person (described as 'consolidated related parties' and 'declared related parties')
185 This was a purpose of the ER Determination and its predecessors and, in particular, of provisions including the revenue of related entities in the eligible revenue of participating person. As, for example, the Explanatory Statement to the 1998 ER Regulations explained (at p. 11):
because "eligible revenue" is being used to determine USO contributions which are a tax, there is incentive for carriers to minimise their revenue and thus their contributions. To discourage and, if necessary, address this problem, the starting point for defining eligible revenue will be the consolidated annual financial statements of the ultimate reporting entity into which the carrier is consolidated. This means almost all relevant revenue will be captured from the start. From this amount, inappropriate revenue will be able to be deducted[.] This approach will also ensure reliable and comprehensive audit trails are maintained. The ACA will also be able to declare additional revenue streams where it is necessary to deal with avoidance strategies.
186 The power to declare additional revenue streams continues to be a feature of the scheme established by the ER Determination. Specifically, s 32 provides that:
(1) The ACMA may, in writing, declare that one or more specified participating persons (but not all participating persons) are not entitled to deduct a specified amount or payment under this Part.
(2) The declaration must state that the declaration is to have effect:
(a) for a specified eligible revenue period; or
(b) while the declaration is in force.
187 Nonetheless, it is trite that the ACMA is not the Australian Taxation Office. It has neither the function nor the power of determining whether or not a particular participating person or corporate group has structured its affairs so as to engage in tax avoidance with respect to the Levy. Rather, as the Explanatory Statement to the 1998 ER Regulations explained, the 1998 ER Regulations were intended to "address the possibility of [tax] avoidance by including in the calculation of eligible revenue the revenue of entities that are related to a carrier through accounting arrangements or because of declaration by the ACA" (at p. 2) (emphasis added) and to allow the ACA to declare additional revenue streams "where it is necessary to deal with avoidance strategies" (at p. 11). Thus it is highly unlikely that, in conferring the discretion in s 33 of the ER Determination, the intention was to mandatorily require the ACMA (and its predecessor) to consider in every case whether a particular participating person was engaging, or was likely to be engaging, in a tax avoidance strategy as a condition of a valid eligible revenue decision which included revenue from a related entity. The purpose of minimising tax avoidance could equally be addressed by taking away the incentive to divert revenue to a non-participating person who is a related entity by imposing the levy upon telecommunications sales revenue on participating person, irrespective of whether the revenue was earned by the participating person itself or a related entity. That is, in my view, precisely what the ER Determination does. It follows that the applicant's submissions proceed, with respect, on a fundamental misapprehension of the way in which the ER Determination operates. This is not, of course, to suggest that the ACMA might not, in an appropriate case, form a view on whether or not a particular structure or strategy may have been adopted to circumvent or minimise the Levy liability and take that into account. That is, however, a different question from whether or not the ACMA is required to have regard to that consideration as a condition of a valid exercise of the discretion in s 33 of the ER Determination, as the applicant contends.
188 In any event, even if the ACMA was required to consider the objective of tax avoidance or the question of whether the participating person had benefited from the carrier licence, Axicom Land has not established that the ACMA failed to do so.
189 First, the ACMA expressly took into account the submission that Axicom Land did not itself generate revenue in the 2019-2020 eligible revenue period, but rejected that submission on the basis that:
(1) Axicom Land obtained the carrier licence to pursue its business venture for which such a licence was required; and
(2) as a consequence:
(a) it obtained the benefits, powers, and privileges conferred by the licence over the eligible revenue period; and
(b) it was subject to the obligations, including those arising from being a participating person, in circumstances where the ER Determination expressly brought the revenue of a consolidated related party into the calculation of a carrier's eligible revenue, irrespective of whether the carrier itself generated revenue in that period.
190 There is nothing formulaic about that consideration which suggests a failure by the ACMA to consider Axicom Land's submission according to law. Nor does Axicom Land challenge the correctness of any of those findings. It follows that ACMA's challenge is ultimately based upon its disagreement with the weight which the ACMA gave to these considerations over the weight given to the fact that Axicom did not earn any revenue from its carrier licence. However, it is well established that issues of weight are generally for the administrative decision-maker and not for the Court on judicial review: Peko-Wallsend at 41 (Mason J); Primary Health at [21] (the Court); Plaintiff M1 at [24] (Kiefel CJ, Keane, Gordon and Steward JJ).
191 Secondly, no proper foundation has been established on the basis of which it can be inferred that the ACMA failed to consider Axicom Land's submission that there was no intention to divert revenue which would otherwise have been subject to the Levy.
192 Axicom Land's submission dated 16 August 2021 providing reasons as to why the discretions should be exercised in its favour did not make any submission in terms that the ACMA should take into account the lack of any tax avoidance strategy in exercising the discretions. At best, this might be implied from the submission that APL had operated its tower business for many years without a carrier licence (as it was entitled to do) and without any obligation to contribute to the Levy although it is fair to say that that would be a "long bow to draw". In any event, those submissions which were made by Axicom Land were expressly addressed by the ACMA, together with the other submissions made by Axicom Land in its August letter, namely, that: APL's tower business would face unfair competitive disadvantage vis-à-vis competitors which are not carriers and not subject to the Levy; and Axicom Land would face a competitive disadvantage vis-à-vis its competitors which would not be required to contribute to the Levy until they achieved more than $25m in revenue.
193 However, Axicom Land did submit in its letter dated 9 December 2021 that APL's sales revenue should not be included in Axicom Land's eligible revenue because (among other things):
the intention behind the 'consolidated related party' and 'declared related party' regime is to discourage and deal with persons trying to minimise their revenue, and thus levy payments, by diverting revenue to associates that are not participating persons. [APL's] decision to set up and invest in an entirely separate (but related) Australian based small cell business has not (and will not) involve diverting or minimising revenue earned from any small cell activity involving Axicom Land to other Axicom entities. The [APL] tower infrastructure business was formed in 2000 and will continue to be [APL's] core business. [APL] is not directly involved in Axicom Land's activities and the revenue of Axicom Land will not be diverted to [APL] in the future.
194 This submission was expressly referred to in the recommendation to the ACMA considering Axicom Land's request for a declaration under the heading "Initial Engagement with Axicom Land". Furthermore, the letter dated 8 October 2021 providing reasons for the ACMA's decision not to exercise its discretion explained that the ACMA had considered Axicom Land's request, noted the matters submitted by it in support of that request, and considered the other information Axicom Land had provided. As such, there is nothing to suggest that Axicom Land's submission on this issue was overlooked and therefore that there was a failure by it to consider the question of tax avoidance. This is especially so in circumstances where the 16 August 2021 letter from Axicom Land, which set out the reasons why the statutory discretions should be exercised in its favour, did not refer to the issue. In other words, the failure by the ACMA expressly to consider the issue in its 8 October letter may well be explained by the apparent lack of weight given to it by Axicom Land in its 16 August submissions in support of the exercise of the discretions.
195 In this regard, it is significant that the reasons for the ACMA's resolution not to exercise its statutory discretions were provided by the ACMA in its October letter in response to the informal request for reasons by Axicom Land. As such, there were no requirements governing the content of those reasons, such as a requirement that the ACMA set out its findings on material questions of fact. That being so, it is difficult to draw any inferences as to what the ACMA did not consider on the basis of what was mentioned in the October letter. As Robertson J explained in Jabbour v Secretary of the Department of Home Affairs [2019] FCA 452; (2019) 269 FCR 438 at [112] with respect to the approach to be adopted in inferring error from a statement of reasons where there is no statutory obligation to provide reasons:
The second respondent's document is not a statement of reasons in the familiar form, whether under statute or otherwise. In Plaintiff M64/2015 v Minister for Immigration and Border Protection (2015) 258 CLR 173 at [25] French CJ, Bell, Keane and Gordon JJ said:
It is well settled that in the context of administrative decision-making, the court is not astute to discern error in a statement by an administrative officer which was not, and was not intended to be, a statement of reasons for a decision that is a broad administrative evaluation rather than a judicial decision. It is possible that error of law on the part of the Delegate might be demonstrated by inference from what the Delegate said by way of explanation of his decision; but it must be borne in mind that the Delegate was not duty-bound to give reasons for his decision, and so it is difficult to draw an inference that the decision has been attended by an error of law from what has not been said by the Delegate. Further, "jurisdictional error may include ignoring relevant material in a way that affects the exercise of a power"; but here the plaintiff does not show that relevant material was ignored simply by pointing out that it was not mentioned by the Delegate, who was not obliged to give comprehensive reasons for his decision. Further, the Delegate's letter is "not to be scrutinised upon over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons are expressed".
(Emphasis added.)
196 This contrasts with the position where an administrative decision-maker is under an obligation to provide a statement of reasons setting out the findings on material facts and reasons for decision: see e.g. Yusuf at [5] (Gleeson CJ).
197 That notwithstanding, in my view it is reasonable to infer from the circumstances in which the October letter was provided and the statement at the commencement of the letter, that it sets out those matters which the ACMA considered were the material factors weighing against the exercise of discretion in ss 9(2) or 33. It also expressly addressed all of the contentions which Axicom Land identified in its 16 August 2021 letter in support of the exercise of the discretions. However, as I have already explained, the ACMA was not under any obligation to address those submissions which it considered were not material or relevant. Nor, even if the ACMA was required to consider whether or not there was a tax avoidance purpose in the separate revenue streams as between Axicom Land and APL, has Axicom Land established that the ACMA failed to do so. It could equally be inferred that the ACMA did in fact consider that submission, but did not consider it to be sufficiently material to be included in the reasons it gave for refusing the exercise of the discretion.
198 Thirdly, no error of law has been established with respect to the ACMA's approach in comparing the treatment of Telstra, Optus and Vodafone with Axicom Land on the basis that these are "the Axicom Group's competitors". Specifically, the ACMA found that:
we also note that in Axicom Land's application for the carrier licence it noted that the Axicom group is the largest independent owner of shared wireless communication infrastructure with approximately 20% of the Australian wireless telecommunications shareable tower infrastructure market with Telstra, Optus and Vodafone identified as having a combined 70% ownership of the remaining market share. This suggests that the Axicom group's competitors are other telecommunications infrastructure providers currently already contributing to the levy, rather than other entities engaged in property development who may pursue an activity outside of the telecommunications industry.
199 The ACMA's finding in this respect was a response to the contention in Axicom Land's letter dated 16 August 2021 (which bears repeating here) that:
Axicom's tower business would face unfair competitive disadvantage if its existing revenue was subject to the [Levy] given its current business does not require a carrier licence and it faces actual and potential competition from competitors which are not carriers and are not subject to the [Levy].
Axicom Land would be placed at an overwhelming competitive disadvantage to its potential competitors (which would not be required to contribute to the [Levy] until they achieved $25M in revenue) whereas the Axicom group is potentially required to make a large contribution to the [Levy] prior to earning any revenue.
(Emphasis in bold and italics added.)
200 As such, the ACMA was relevantly responding to and rejecting Axicom Land's characterisation of its relevant competitors.
201 Axicom Land contended nonetheless that this approach was in error because it ignored the distinction between participating persons (Axicom Land) and a consolidated related party (relevantly APL). As a consequence, Axicom Land's argument appears to be that, in considering whether the Levy was imposed in a relevantly proportionate manner as between participating persons, the ACMA should have focused solely upon the revenue earning activities of Axicom Land, as the participating person, which did not engage in the wireless telecommunications shareable tower infrastructure market and earned nil revenue as a carrier. Thus, in its submission, regard should not have been had to the revenue earning activities of the separate entity, APL.
202 In support of this submission, Axicom Land relied upon the general statement of purpose at the commencement of the Explanatory Statement, namely, that "[c]ontributions are, in general, proportional to each participating person's share of total eligible revenue for a relevant eligible revenue period" (emphasis added). However, that statement is qualified by words "in general" and is no more than a general statement of purpose at the commencement of the Explanatory Statement. It does not purport to address the detail of the scheme, such as the inclusion of the revenue of related parties in the assessment of eligible revenue.
203 More fundamentally, it is s 33 of the ER Determination itself which falls for construction. Axicom Land's submission falls into the error of construing the extrinsic materials instead of the provision: Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 at [39] (the Court); Saeed v Minister for Immigration and Citizenship [2010] HCA 23; (2010) 241 CLR 252 at [31] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ). Yet, no submissions were made by Axicom Land as to how the ACMA's approach in this respect was wrong in law by reference to the ER Determination. In my view, when regard is in fact had to the ER Determination, there is no apparent reason why the ACMA's line of reasoning was impermissible, given that it remains the case under the ER Determination that the starting point for defining eligible revenue is the consolidated annual financial statements of the ultimate reporting entity into which the carrier is consolidated, and the question under s 33 is ultimately whether revenue from the consolidated group is inappropriately included on the basis that it should be regarded as non-telecommunications revenue.
204 Ultimately therefore, with respect, this submission reduces to a disagreement with a factual finding by the ACMA which is beyond the power of the Court to revisit.
205 Ground three must be dismissed.