Keris Pty Ltd (Trustee) v Deputy Commissioner of Taxation

AND: DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

JUDGE: SIOPIS J DATE: 4 december 2015 PLACE: PERTH

REASONS FOR JUDGMENT 1 In September 2014, the applicant was the owner of a large tract of land which, as part of its business, it proposed to subdivide into 28 lots and then sell each of the subdivided lots. 2 On 25 September 2014, an officer of the respondent, the Deputy Commissioner of Taxation (the Commissioner), issued to the applicant a notice requiring it to give security to the Commissioner for the due payment of future tax-related liabilities in the amount of $350,000 by way of a mortgage over the land owned by the applicant which it proposed to subdivide. In issuing the notice, the Commissioner invoked s 255-100 in Sch 1 to the Taxation Administration Act 1953 (Cth). The notice included a statement to the effect that auditors from the Australian Taxation Office had estimated that the sale of the subdivided lots would cause the applicant to incur GST liabilities of approximately $373,886 after taking into account development costs. 3 Ms Tina Bazzo was then the sole shareholder of the applicant and had, since 1 May 2014, been a director of the applicant. 4 The applicant commenced this proceeding under s 39B of the Judiciary Act 1903 (Cth) and under the Administrative Decisions (Judicial Review) Act 1977 (Cth) to set aside the notice. 5 The applicant amended its originating application a number of times. At trial, the applicant confined its case to the claim that on the proper construction of s 255-100 of the Taxation Administration Act, the Commissioner was not, in the circumstances of this case, empowered to issue the notice. 6 The applicant also contended that the construction placed by the Commissioner upon s 255-100 would render the section to be outside of the taxation power of the Constitution and referred to s 15A of the Acts Interpretation Act 1901 (Cth) to support its construction of s 255-100. 7 In response to the applicant's request for reasons for decision to issue a notice to give security, the Commissioner, by a letter dated 12 December 2014, provided the following statement of reasons: I refer to your letter dated 21 October 2013, requesting that I provide you with reasons pursuant to s 13 of the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") in relation to my decision to issue a Notice to Give Security ("the Security Bond Demand") to your client under Subdivision 255-D in Schedule 1 to the Taxation Administration Act 1953 ("TAA 1953"), requiring your client, Keris Pty Ltd as trustee for 1748 Bradley Street Trust, to provide $350,000 of security in the form of a mortgage over its real estate assets. The Security Bond Demand requires your client to give security in relation to an amount of at least $373,000 of tax-related liabilities which it is expected to incur as a result of the sale of trust assets. I set out my reasons for my decision to issue the Security Bond Demand, below. A. Finding on material questions of fact in relation to the decision (i) Tina Bazzo is the sole shareholder of Keris Pty Ltd and has been its director since 1 May 2014. (ii) Keris Pty Ltd is the trustee of the 1748 Bradley Street Trust. (iii) On 10 July 2013, Keris Pty Ltd purchased property ("the Land") located at 1748 Bradley Street, Southern River for an amount of approximately $950,000 from Westend Asset Pty Ltd. (iv) The director of Westend Asset Pty Ltd was Tina Bazzo's mother, Josephine Lynette Bazzo. (v) Westend Asset Pty Ltd went into court appointed liquidation on 28 October 2013 in respect of portions of a tax liability totalling $4,580,356. (vi) At the time at which the Security Bond Demand was issued, ATO auditors had observed that a document detailing the sale of the Land from Westend Assets Pty Ltd to Keris Pty Ltd bore annotations added by staff of the Western Australian Office of State Revenue which indicated to them that the Land had been purchased by Keris Pty Ltd in its capacity as trustee of the 1748 Bradley Street Trust. (vii) At the time at which the Security Bond Demand was issued, ATO auditors formed an opinion that a "subject to dealing" marking on the title indicated that the Land was being subdivided, with new titles expected to issue on 30 September 2014. (viii) At the time at which the Security Bond Demand was issued, Keris Pty Ltd had not registered for an ABN or for GST, either in its own right or in its capacity as trustee of the 1748 Bradley Street Trust. (ix) Since 17 January 2002, Tina Bazzo has been a director of Gucce Holdings Pty Ltd, a company which owed in excess of $62 million in unpaid tax liabilities as at the time at which the Security Bond Demand was issued. ATO auditors concluded that Gucce Holdings Pty Ltd had engaged in a "sham" arrangement so as to inappropriately receive a claim to input tax credits. (x) Gucce Holdings Pty Ltd contest the efficacy of a Notice issued pursuant to section 260-5 of Schedule 1 to the Taxation Administration Act 1953 (a "garnishee" notice) by asserting that lease payments made by the recipient of the notice were trust assets, rather than assets of Gucce Holdings Pty Ltd in its non-trustee capacity. In support of the company's contention, Tina Bazzo gave Amon Barton, an officer in the Australian Taxation Office, a copy of a lease agreement which purported to show that the lessor was a trust, rather than Gucce Holdings Pty Ltd in a non-trustee capacity. The lease document appeared to have been doctored to give that appearance, given that it was otherwise identical (including to the extent of handwritten notations) to the copy of the lease provided by the lessee, which showed that Gucce Holdings Pty Ltd was the lessor. (xi) While she was director of another company - Paramount View Pty Ltd - Tina Bazzo failed to cause that company to pay tax liabilities in excess of $588,000, almost all of which is irrecoverable-at-law as a result of the company entering an insolvency administration. (xii) In the Administration of Paramount View Pty Ltd, Gucce Holdings Pty Ltd proved for a debt of approximately $7 million and claimed that it had a fixed and floating charge over the assets of Paramount View Pty Ltd. (xiii) In a May 2013 report to creditors, the administrator of Paramount View Pty Ltd observed that Tina Bazzo's granting of the fixed and floating charge (at a time when she was director of both companies and should have known that Paramount View Pty Ltd was insolvent) was a breach of her director's duties. The administrator also opined that there were grounds for an insolvent trading action against Tina Bazzo arising from her directorship of Paramount View Pty Ltd. (xiv) Until 2 September 2011, Tina Bazzo was a director of Gundaroo Investments Pty Ltd during which time the company incurred more than $3 million of unpaid tax liabilities. (xv) At the time at which the Security Bond Demand was issued, Tina Bazzo was a director of 220 St George's Terrace Pty Ltd, a company which had an unpaid tax liability of in excess of $98,000 arising from its role a trustee of the 220 St George's Trust. (xvi) Between 15 January 2007 and 19 November 2012, Tina Bazzo was the director of Parliament Place Pty Ltd, a company which, under her directorship, incurred tax liabilities exceeding $1.1 million, almost half of which will be irrecoverable-at-law as a result of the company entering into an insolvency administration and subsequent Deed of Company Arrangement. (xvii) At the time the Security Bond Demand was issued, Tina Bazzo was the director of six companies which had outstanding tax returns: Byford River Pty Ltd; 70 Thomas Street Pty Ltd; Flynn Drive Holdings Pty Ltd; Gucce Holdings Pty Ltd; Moonspark Nominees Pty Ltd and Silverleaf Enterprises Pty Ltd. (xviii) On 23 September 2014, Amon Barton spoke with a representative of the mortgagee who has mortgages on the real estate owned by Keris Pty Ltd as trustee for the 1748 Bradley Street Trust. The mortgagee did not express any opposition to the prospect of Keris Pty Ltd granting a subordinate mortgage to the Commissioner over the real estate. B. Evidence or other material on which these findings were based: a. The 31 May 2013 Report to Creditors compiled by the Administrator of Paramount View Pty Ltd; b. Information available on the database maintained by ASIC in respect of Tina Bazzo's directorships and shareholdings and the directorships and shareholdings of other companies; c. A Transfer of Land document dated 10 July 2013, in respect of the transfer of title in Lot 1748 on Plan 3315 from Westend Asset Pty Ltd to Keris Pty Ltd; d. Information held on ATO systems in relation to lodgement obligations and outstanding tax liabilities of Keris Pty Ltd, Gundaroo Investments Pty Ltd, 220 St George's Terrace Pty Ltd; Gucce Holdings Pty Ltd, Parliament Place Pty Ltd, 70 Thomas Street Pty Ltd, Byford River Pty Ltd, Flynn Drive Holdings Pty Ltd, Moonspark Nominees Pty Ltd, Silverleaf Enterprises Pty Ltd and Paramount View Pty Ltd; e. A garnishee notice issued on 3 April 2013 under section 260-5 of the TAA 1953 in respect of tax liabilities owed by Gucce Holdings Pty Ltd. f. The copy of a lease dated 30 September 2009 purportedly between Gucce Holdings Pty Ltd as trustee for the Gucce trust (as Landlord) and Super Cheap Auto Pty Ltd (as Tenant) which was furnished by Gucce Holdings Pty Ltd pursuant to a 353-10 of the TAA 1953 Notice; g. The copy of a lease dated 30 September 2009 purportedly between Gucce Holding Pty Ltd (as Landlord) and Super Cheap Auto Pty Ltd (as Tenant) which was furnished by Super Cheap Auto Pty Ltd; h. A written submission prepared by Amon Barton of ATO Strategic Recovery which recommended the issue of a Notice under s 255-105 of Schedule 1 to the TAA 1953 to Keris Pty Ltd as trustee for the 1748 Bradley Street Trust; i. Subdivision 255-D in Schedule 1 of the TAA 1953; j. Law Administration Practice Statement 2011/14. C. Reasons for decision In making my decision to issue the Security Bond Demand, I was guided by Law Administration Practice Statement 2011/14 and had particular regard to paragraphs 94 to 123. The written submission prepared by Amon Barton said that auditors working in the Indirect Taxes section of the ATO had estimated that the sale of 28 lots owned by Keris Pty Ltd as trustee for the 1748 Bradley Street Trust would cause it to incur a GST liability of $373,886. I believed that there was a significant risk that Keris Pty Ltd as trustee for the 1748 Bradley Street Trust would not pay that tax liability having had regard to the circumstances and the material set out in sections A and B above. Based on my belief that there was a significant risk that Keris Pty Ltd would fail to pay the tax liabilities of Keris Pty ltd as trustee for the 1748 Bradley Street Trust, I concluded that it was appropriate that I should issue a Security Bond Demand to require the provision of $350,000 of security to mitigate the risk that the anticipated $373,000 of tax-related liabilities would not be paid. I recognised that if I were to acquire the security in the form of a cash deposit, it might constitute an unreasonable burden on the company's cash resources. Accordingly, I concluded that the appropriate form of security I should seek would be a mortgage over the company's real estate assets. I allowed a clear 34 days for compliance with the Security Bond Demand, knowing from my previous experience with securities that that would be ample time to provide the mortgage.

proper construction of s 255-100 of the taxation administration act 8 I deal with the first of the applicant's contentions. 9 Section 255-100 provides as follows: (1) The Commissioner may require you to give security for the due payment of an existing or future *tax-related liability of yours if: (a) the Commissioner has reason to believe that: (i) you are establishing or *carrying on an *enterprise in Australia; and (ii) you intend to carry on that enterprise for a limited time only; or (b) the Commissioner reasonably believes that the requirement is otherwise appropriate, having regard to all relevant circumstances. (2) The Commissioner may require you to give the security: (a) by way of a bond or deposit (including by way of payments in instalments); or (b) by any other means that the Commissioner reasonably believes is appropriate. (3) The Commissioner may require you to give security under this section: (a) at any time the Commissioner reasonably believes is appropriate; and (b) as often as the Commissioner reasonably believes is appropriate. Example: The Commissioner may require additional security if he or she reasonably believes that the original security requirement underestimated the amount of the likely tax-related liability. * For definition, see section 995-1 of the Income Tax Assessment Act 1997. 10 Section 995-1 of the Income Tax Assessment Act 1997 (Cth) provides that "tax-related liability" has the meaning given by s 255-1 in Sch 1 of the Taxation Administration Act. That section provides: (1) A tax-related liability is a pecuniary liability to the Commonwealth arising directly under a taxation law (including a liability the amount of which is not yet due and payable). 11 The applicant's contention is that, on the proper construction of s 255-100, there is a "statutory condition precedent" to the enlivening of the Commissioner's power to issue a notice to provide a security, namely, that the taxpayer in fact had an "existing or future tax-related liability". The applicant went on to contend that for the purposes of s 255-100 a "future tax-related liability" only existed where an event had occurred which will have triggered a liability in the taxpayer to pay tax in the future albeit that the amount of that liability was not ascertainable. 12 The applicant contended that on the facts in this case, the precondition had not been satisfied because when the notice was issued, the applicant had not yet subdivided the land into lots for the purposes of sale; and, therefore, it had not engaged in any transaction that could in the future be assessed in working out its liability to pay GST for any future GST period. It followed, said the applicant, as at 25 September 2014 when the notice was issued, no transaction had occurred that could give rise to a "future tax-related liability" within the meaning of s 255-100 of the Taxation Administration Act and, therefore, the issuing of the notice was beyond power. 13 It was not sufficient, said the applicant, that the Commissioner believed that the applicant was likely at some stage in the future to sell the 28 lots for an amount which would incur a GST liability of at least $373,886. Thus, the applicant contended that s 255-100 did not confer power on the Commissioner to require security whenever he believed, however justifiably, as a matter of probability, that the taxpayer might in the future engage in a transaction that might later give rise to a liability to one or more of a range of taxes. 14 The applicant supported its contention by adopting the three stage process in the imposition of a tax, which was referred to by Lord Dunedin in the case of Whitney v Commissioners of Inland Revenue [1926] AC 37. 15 The first stage, according to the applicant, is the declaration in the taxing statute of circumstances in which a person will become liable to pay the tax. 16 In respect of the tax in question in this case, namely, GST, said the applicant, the relevant statutory integers, in working out the liability for GST in any tax period, are GST on taxable supplies and entitlements to input tax credits on creditable acquisitions and importations during that tax period. 17 The second stage is the assessment process whereby a liability is determined. 18 The third stage is the payment of the tax. 19 The applicant contended that the reference to "future tax-related liability" in s 255-100 refers to the first stage in the three stage process. The term "existing tax-related liability in s 255-100", said the applicant, referred to the second stage of the three stage analysis. The applicant went on to say that because the applicant had not sold any of the subdivided lots by the date of the notice, there was no event which satisfied any of the statutory integers of liability for GST, and, therefore, there was no future tax-related liability. 20 The Commissioner, however, contended that s 255-100 of the Taxation Administration Act imposed no "statutory condition precedent" of the kind contended for by the applicant, and the words "future tax-related liability" were not to be given the restricted construction contended for by the applicant. The Commissioner contended that the enlivening of the power in the Commissioner to issue the notice depended on the existence of one of the circumstances set out at s 255-100(1)(a) or (1)(b) of the Taxation Administration Act. 21 Further, said the Commissioner, the word "future" in the phrase "future tax-related liability" meant an "expected" or "anticipated" tax-related liability. The Commissioner said that that meant a tax-related liability that was not presently existing but which was expected to arise in the future, namely, a prospective tax-related liability. 22 In approaching the question of construction, it is necessary to have regard to the text of the statute in question. As the High Court observed in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 47: This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the text itself. Historical considerations and extrinsic materials cannot be relied on to displace the clear meaning of the text. The language which has actually been employed in the text of legislation is the surest guide to legislative intention. The meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision, in particular the mischief it is seeking to remedy. (Footnotes omitted.) 23 In my view, it is apparent from the text of s 255-100 of the Taxation Administration Act that the applicant's argument as to the proper construction of s 255-100 must fail. 24 First, I accept the Commissioner's contention that the power in the Commissioner to require the taxpayer to give security is enlivened in one or other of the prescribed circumstances in s 255-100(1)(a) or (1)(b). That is evident from a plain reading of the statute. 25 Secondly, it is also apparent from the terms of s 255-100(1)(a) that the construction of the words "future tax-related liability" advanced by the Commissioner is to be preferred to that contended for by the applicant. 26 Section 255-100(1)(a) contemplates that the power to issue a notice to provide security is enlivened in respect of a person or entity, that the Commissioner has reason to believe, is "establishing" or "carrying on" an enterprise in Australia and intends to carry on that enterprise for a limited time only. 27 It is to be observed that s 255-100(1)(a) refers both to the circumstance of a person or entity "establishing" an enterprise and a person or entity "carrying on" an enterprise. The juxtaposition of the words "establishing" and "carrying on" in s 255-100(1)(a) shows that Parliament intended that the power to issue a notice is enlivened in circumstances, even before the person or entity had commenced carrying on the proposed enterprise, and was no further advanced in that endeavour than engaging in the process of establishing the enterprise. Because the concept of "establishing" an enterprise embraces preliminary activities that do not have the trading connotations associated with "carrying on" a business, it is apparent that the power to issue a notice may be enlivened well before the circumstance contended for by the applicant in this case, namely, the sale of one or more of the subdivided lots. 28 It follows that the construction of the words "future tax-related liability", contended for by the applicant, is inconsistent with the presence of the words "establishing…an enterprise" in s 255-100(1)(a) - which provide for the enlivening of the power to issue a notice in circumstances where the Commissioner has reason to believe that the person or entity is doing no more than "establishing" an enterprise of the nominated nature. 29 On the other hand, the construction of the words "future tax-related liability" advanced by the Commissioner, can be accommodated within the ambit of the words of s 255-100(1)(a), with the consequence that s 255-100 can be read harmoniously. 30 Further, it is apparent from the terms of s 255-100 when considered in context, that its purpose is to facilitate the recovery of tax where there is a risk, arising from the nature of the business being undertaken or proposed to be undertaken, or by reason of other circumstances, that the liability to pay tax will not be met. 31 That this is the statutory purpose of s 255-100 is supported by the Explanatory Memorandum in respect of the Tax Laws Amendment (Transfer of Provisions) Bill 2010, circulated by the authority of the Treasurer, the Hon Wayne Swan MP, which provides as follows: Differences in Subdivision 255-D in Schedule 1 to the TAA 1953 (former section 213) Application of the rules to all taxes 2.36 Consistent with current tax administration policy about having a single set of general collection and recovery rules for all taxes, the effect of section 213 has been expanded to cover all taxes administered by the Commissioner. [Schedule 1, item 9, section 255-100] 2.37 The rewrite applies to all existing and future tax-related liabilities. Section 213 was limited to existing and future income tax liabilities. 2.38 However, a number of provisions in the tax laws extended the operation of section 213 to cover particular taxes (for example, franking deficit tax). These extensions are no longer necessary and are being repealed. [Schedule 1, item 28] 2.39 The overall structure of the rewrite and the conditions it contains have not been amended. However, the rewrite is a simplified expression of section 213. Section 213 is currently a single block of text. The current conditions have been separated out with the intention of making clearer each of the conditions and powers it contains. 2.40 References to "carrying on a business" in section 213 have been changed to "carrying on an enterprise" to reflect the widened application of the provisions to other taxes, including the goods and services tax. [Schedule 1, item 9, paragraph 255-100(1)(a)] Operation of the security deposit rules 2.41 The security deposit rules allow the Commissioner to seek security from a taxpayer for an existing or future tax liability in certain situations. Refusal to provide security sought by the Commissioner is a criminal offence. [Schedule 1, item 9, Subdivision 255-D] 2.42 The Commissioner may ask for security where he or she believes there is a serious risk of a tax-related liability not being paid. Examples of such situations include: • where a taxpayer plans to temporarily carry on an enterprise in Australia and leave without returning; • where the taxpayer has a history of non-compliance (including by defaulting on their tax liabilities); • where the directors of a corporate taxpayer have a history of non-compliance; • where the Commissioner is granting a taxpayer the benefit of a payment arrangement; and • to protect the integrity of the tax system against schemes such as "fraudulent phoenix activity", which broadly involves winding up a company (with significant unpaid debts) but continuing the same business through a newly 'risen' company. 2.43 The Commissioner must consider all relevant matters and act reasonably in deciding whether to request security, how much security to require a taxpayer to provide, what kind of security to accept and when, and how often to ask for security. [Schedule 1, item 9, section 255-100] 2.44 The Commissioner's decisions are administrative in nature and reviewable by the Federal Court of Australia under the Administrative Decisions (Judicial Review) Act 1977. … 2.48 The Commissioner's ability to exercise his or her rights in relation to a security arrangement (to settle a tax-related liability) is governed by the general law applying to security arrangements and will often be situation specific and dependent upon the reason for the request for security and the nature of the liabilities to which the security relates. In general, the Commissioner would be able to exercise his or her rights under the security arrangement where the taxpayer has failed to meet his or her tax debt as and when it fell due, or where the taxpayer has breached the conditions of a payment arrangement. Further, a taxpayer may request the Commissioner use a security deposit to extinguish their tax-related liability. 2.49 Whether the Commissioner must relinquish his or her rights under a particular security arrangement is also governed by the general law applying to security arrangements. In general, the Commissioner would be required to relinquish his or her rights under a security arrangement (for example, by refunding a bond) when the underlying tax-related liability is discharged. However, a further requirement to give security could sometimes be met by the Commissioner simply retaining the rights under an existing security arrangement. 32 The construction of s 255-100 advanced by the Commissioner is consistent with, and promotes, the statutory purpose of that provision and should, on that basis, also, be preferred to that advanced by the applicant. 33 It follows that I do not accept the applicant's contention that the power in the Commissioner to issue the notice to provide security was not enlivened because the applicant had by the date of the notice not yet subdivided the land into the lots which it intended to sell as part of the applicant's business. 34 I should observe that the applicant sought to support the construction for which it contended by referring to the cases of Bluebottle UK Limited v Deputy Commissioner of Taxation (2007) 232 CLR 598, Clyne v Deputy Commissioner of Taxation (Cth) (1981) 150 CLR 1, Zuks v Jackson McDonald (a Firm) (1996) 132 FLR 317 and Federal Commissioner of Taxation v Park (2012) 205 FCR 1. However, each of these cases deals with a statutory provision which is different to the statutory provision in question. None of the cases is helpful in casting light upon the construction issue in this case. 35 The applicant also advanced an argument that the presence of the word "due" in the phrase "security for the due payment of an existing or future tax-related liability" supported a construction that the power to issue a notice was only enlivened when the tax liability was then due and payable. 36 This argument is without merit. It is apparent that the words "due payment" in the context of "security for the due payment of an existing or future tax-related liability" refer to the purpose of the taking of the security, namely, to secure the payment of the monies which are or may in the future become due and payable by way of tax.

Constitutional argument 37 I deal now with the applicant's argument that the construction contended for by the Commissioner would render s 255-100 of the Taxation Administration Act outside of the legislative power of the Commonwealth. The applicant relies upon s 15A of the Acts Interpretation Act to contend that the construction contended for by the applicant above should be adopted. 38 Section 15A of the Acts Interpretation Act provides as follows: Construction of Acts to be subject to Constitution Every Act shall be read and construed subject to the Constitution, and so as not to exceed the legislative power of the Commonwealth, to the intent that where any enactment thereof would, but for this section, have been construed as being in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that power. 39 The applicant contended that s 255-100 did not, on the Commissioner's construction, fall within the taxation power in s 51(ii) of the Constitution for three reasons. 40 First, s 255-100 was not a section which provided for the imposition of a tax. 41 Secondly, s 255-100 was outside of the taxation power in s 51(ii) of the Constitution because it was not to be regarded as a collection provision such as the provisional tax regime upheld in Commissioner of Taxation of the Commonwealth of Australia v Clyne (1958) 100 CLR 246 (Clyne); nor the wool sales advance payments scheme upheld in Moore v The Commonwealth (1951) 82 CLR 547 (Moore). The applicant said that, unlike the statutory schemes considered in Clyne and Moore, s 255-100 did not provide for a mechanism for making the security provided by the taxpayer applicable to the ultimate tax-related liability, nor did it provide for a method of refunding the security in the event that there was no ultimate liability to tax. 42 Thirdly, the applicant contended that the provision was beyond the taxation power because it was arbitrary in operation. This is because, said the applicant, s 255-100(1)(b) vested the Commissioner with a very wide discretion in determining the persons or entities that would be subject to the obligation to provide security. The applicant said that the exercise of the power must be confined by some reference to ascertainable criteria, and should have sufficiently general application. The applicant relied upon the following observations in the case of Deputy Commissioner of Taxation of the Commonwealth of Australia v Truhold Benefit Proprietary Limited (1985) 158 CLR 678 at 684 (Truhold Benefit): In MacCormick v. Federal Commissioner of Taxation it was held that the recoupment tax, for which the Act provides, answers the usual description of a tax. Amongst the characteristics which were said by the majority to bring it within that description was the fact that the tax is not arbitrary. This was, as the relevant passage shows, a reference to the fact that liability can only be imposed by reference to ascertainable criteria with a sufficiently general application and that the tax cannot lawfully be imposed as a result of some administrative decision based upon individual preference unrelated to any test laid down by the legislation. (Footnote omitted.) 43 In New South Wales v The Commonwealth of Australia (Work Choices Case) (2006) 229 CLR 1 at [142], the High Court observed as follows on the question of determining whether a law was within a head of legislative power: The general principles to be applied in determining whether a law is with respect to a head of legislative power are well settled. It is necessary, always, to construe the constitutional text and to do that "with all the generality which the words used admit". The character of the law must then be determined by reference to the rights, powers, liabilities, duties and privileges which it creates. The practical as well as the legal operation of the law must be examined. If a law fairly answers the description of being a law with respect to two subject-matters, one a subject-matter within s 51 and the other not, it is valid notwithstanding there is no independent connection between the two subject-matters. Finally, as remarked in Grain Pool of Western Australia v The Commonwealth, "if a sufficient connection with the head of power does exist, the justice and wisdom of the law, and the degree to which the means it adopts are necessary or desirable, are matters of legislative choice". (Footnotes omitted.) 44 The following observations by Doyle CJ in the case of Rogers v The Queen (1995) 125 FLR 96 at 103 (Rogers) are also relevant: It goes without saying that the power to make laws with respect to taxation is not restricted to laws dealing with the imposition and collection of tax. The power must extend to measures which will enable the system of taxation to function effectively. The power must extend to measures which are directed to the collection of taxation due to the Commonwealth and to measures intended to prevent the evasion of taxation, be that evasion by the concealment of income or assets with a view to avoiding the imposition of liability to pay taxation or with a view to avoiding the payment of taxation which has become due to the Commonwealth. 45 It is the case, as the Commissioner accepted, that s 255-100 does not impose a tax. However, in my view, that circumstance does not render the provision outside of the taxation power. As is evident from the observations of Doyle CJ in Rogers, the taxation power provides for authority to legislate more widely in relation to taxation than passing laws imposing taxes, and includes the power to pass legislation directed to the effective collection of tax, including measures to counter the avoidance or evasion of the payment of tax. In my view, s 255-100 is to be characterised as having the object of securing the payment of tax, and there is, in my view, a sufficient connection between that characterisation and the Constitutional text providing for the power to make laws with respect to taxation. 46 Further, the fact that s 255-100 does not contain provisions in relation to the application of monies paid in advance by a taxpayer such as existed under the provisional tax and wool sales advance payment schemes, does not, in my view, take s 255-100 outside of the ambit of the taxation power. There is a difference in principle between the advance payments made under the statutory schemes and the giving of the security referred to in s 255-100. Each of the two schemes was the creature of statute and, therefore, it is to be anticipated that the schemes in question would contain detailed provisions as to how the schemes were to operate. 47 By contrast s 255-100, refers to a general law institution, namely, the giving of security for the performance of a future obligation, and that circumstance in itself, imposes constraints upon the terms upon which the Commissioner may require the taxpayer to provide the security. The section empowers the Commissioner to require a person or entity to provide the security, but the section leaves a degree of flexibility as to the terms upon which the security is to be given. As is stated in the explanatory memorandum (at [31] above), this flexibility is there to accommodate the nature of the security required and the nature of the liabilities in respect of which the security is sought. 48 In my view, the fact that the statute does not set out in detail the nature and terms of the security which the Commissioner may require the taxpayer to provide, does not undermine the characterisation of s 255-100 as being a law with respect to taxation under s 51(ii) of the Constitution. 49 The observations which were made in the Truhold Benefit case, upon which the applicant relied, have no application in this case. Those observations were made in relation to legislation which imposed a liability to pay tax. The observations were not addressed to the legislation conferring a power upon the Commissioner to seek a security in respect of an existing or future tax-related liability. For the same reasons, the applicant's contention in relation to s 255-100 imposing an "incontestable tax" has no application to this case. 50 It follows that I do not accept the applicant's contention that on the construction advanced by the Commissioner, s 255-100 of the Taxation Administration Act would fall outside of the taxation power. 51 The applicant's application is dismissed with costs. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.