MacCormick v Commissioner of Taxation

1. (1959) 100 C.L.R. 566. 2. (1969) 119 C.L.R. 365. 3. (1958) 100 C.L.R. 32, at p. 40.

Section 190(b) of the Income Tax Assessment Act 1936 provides that the burden of proving that the assessment is excessive shall lie upon the taxpayer, but s. 23 of the Assessment Act provides for conclusiveness of a certificate not only that company tax is due, subject to review and appeal under Div. 5 of the Income Tax Assessment Act, but also that on a date specified the company tax remains unpaid. In so far as s. 23 provides conclusive evidence that the tax has not been paid, it is invalid. If the certificate were evidence that the tax was unpaid or raised a rebuttable presumption that it was unpaid, it would be valid.

Ordinary presumptions, that is, rebuttable presumptions of fact, are useful, and almost indispensable for the operation of an efficient legal system. Conclusive presumptions are dangerous; they prevent any judicial investigation of the matter conclusively presumed, even where it is disputed. Because of limited federal legislative powers and the existence of the federal judicial power, federal Acts providing for conclusive presumptions will often prove invalid.

Section 23(1) is valid, except for the words "and that, on a date specified in the certificate, that company tax remained unpaid". In all other respects, the Acts are valid. The demurrers should be allowed.

The tax imposed by the Taxation (Unpaid Company Tax - Vendors) Act 1982 Cth ("the Vendors Act") and assessed under the Taxation (Unpaid Company Tax) Assessment Act 1982 Cth ("the 1982 Assessment Act") is defined as vendors recoupment tax in s. 3(1) of the latter Act. The tax imposed by the Taxation (Unpaid Company Tax - Promoters) Act 1982 Cth ("the Promoters Act") and assessed under the 1982 Assessment Act is defined as "promoters recoupment tax" in the same sub-section. Vendors recoupment tax is imposed by s. 4 of the Vendors Act; promoters recoupment tax is imposed by s. 4 of the Promoters Act. Each of the Vendors Act and the Promoters Act incorporates the 1982 Assessment Act and requires that Act to be read as one with it. (Hereafter references to particular provisions are references to the provisions of the 1982 Assessment Act unless otherwise indicated). In the first action, the plaintiff challenges the validity of the Vendors Act or alternatively the validity of the imposition of the vendors recoupment tax imposed by s. 4 of the Vendors Act in conjunction with ss. 5(1) and 8(1) of the 1982 Assessment Act. In the second action the plaintiffs challenge the validity of the Vendors Act and the Promoters Act or alternatively the validity of the imposition of the vendors recoupment tax imposed by s. 4 of the Vendors Act in conjunction with ss. 5(1), 6(1) and 8(1) of the 1982 Assessment Act and the validity of the imposition of the promoters recoupment tax imposed by s. 4 of the Promoters Act in conjunction with ss. 7(1) and 8(2) of the 1982 Assessment Act. The defendant Commissioner of Taxation contends that the Vendors Act and the Promoters Act are valid in their entirety. These proceedings are on demurrer to the statement of claim in each action. The interlocking provisions of the three Acts are extremely complex, but it is possible to give a sufficient description of the leading features of the statutory scheme to consider the challenge to the validity of the Acts imposing the respective recoupment taxes.

The quantum of both vendors and promoters recoupment taxes are ascertained by reference to certain "overdue company tax" (see ss. 3(1), 5(1)(g) and 7(1)(f)) which a company has been unable to pay or which a company that has gone out of existence would have been unable to pay immediately before it went out of existence: pars (g) and (h) of ss. 5(1) and 5(2), and pars (f) and (g) of ss. 7(1) and 7(2). The amount to be paid by way of recoupment tax is reduced by a payment of the overdue company tax by reference to which the recoupment tax has been ascertained: s. 9(1) and (6). The amount to be paid by way of vendors recoupment tax is reduced also by a payment of a promoters recoupment tax assessed by reference to the same overdue company tax: s. 9(7). There are two categories of vendors recoupment tax (ss. 5 and 6), and a reduction is provided for in favour of one category of vendors recoupment tax when a payment is made in respect of another category of vendors recoupment tax: s. 9(5). However, no payment of vendors recoupment tax goes in reduction of the overdue company tax by reference to which the vendors recoupment tax is assessed. A payment of promoters recoupment tax is deemed to be applied in reduction of the overdue company tax by reference to which the promoters recoupment tax is ascertained: s. 9(7). The scheme of the three Acts is that an amount equal to but not exceeding the whole of the overdue company tax will be recouped by payment of the vendors recoupment tax and promoters recoupment tax or by the payment of one or other of those recoupment taxes. If both recoupment taxes are payable and are fully paid, the vendors recoupment tax would yield an amount equal to 80 per cent of the overdue company tax, and the promoters recoupment tax would yield an amount equal to 20 per cent of the overdue company tax (s. 7(1)(j)) unless the promoters recoupment tax so calculated would exceed the ceiling prescribed by s. 7(3) in which case the vendors recoupment tax would be correspondingly increased. No person who is liable to be assessed to recoupment tax is or would have been liable to be assessed to any part of the company tax by reference to which his liability to pay a recoupment tax is ascertained. The criteria of liability to pay either of the categories of vendors recoupment tax or to pay promoters recoupment tax are such that the income year in relation to which the relevant overdue company tax is assessed may not have closed at the time of the occurrence of the transaction which might expose a person to liability to pay the recoupment tax - namely, a sale of shares in the company: pars (a) and (b) of s. 5(1) and s. 7(1). At the time of the relevant sale, the persons who later become liable to pay recoupment tax might have no grounds for suspecting, much less knowing, that the company would become unable to pay the taxes which it would become liable to pay - taxes which, if due and unpaid become overdue company tax by reference to which the amount of those persons' liability for recoupment tax is ascertained. It will be necessary to return to the several criteria of liability in greater detail after considering the relevant principles which govern the constitutional validity of laws purporting to impose taxation. However, this partial and abbreviated description of the statutory scheme for recouping amounts equal to unpaid company tax may serve to explain the challenges made to the constitutional validity of the Vendors Act and the Promoters Act. They are said not to be laws with respect to taxation and therefore not to be within the taxation power of the Parliament (s. 51(ii) of the Constitution) or, if they survive that challenge, they are said to deal with more than one subject of taxation and therefore to offend the second paragraph of s. 55 of the Constitution. If, to borrow the metaphor used by Rich and Dixon JJ. in Jolly v. Federal Commissioner of Taxation [32] , the Acts sail away from the Scylla of the first challenge and are not pulled down by the Charybdis of the second, it is then said that they perish on the shoal of s. 23 of the 1982 Assessment Act. That section is said to make each of the recoupment taxes incontestable, an on that account the imposition of the recoupment taxes is said to have exceeded the legislative power of the Parliament.

The taxation power is the only power relied on to support the enactment of the Vendors Act, the Promoters Act and the 1982 Assessment Act. No other power is available. Laws imposing taxation are within the ambit of the power conferred by s. 51(ii) of the Constitution though they do not exhaust it: Moore v. The Commonwealth [33] ; Re Dymond [34] . But a law which purports to impose a tax must be in truth a law imposing taxation if it is to fall within the ambit of the power and is thereby to avoid the invalidating effect of the condition attached to s. 51(xxxi) of the Constitution. As the imposition of taxation is not an acquisition of property within s. 51(xxxi) (Federal Commissioner of Taxation v. Clyne [35] ; Federal Commissioner of Taxation v. Barnes [36] ; Trade Practices Commission v. Tooth & Co. Ltd. [37] ), a law imposing a liability to pay money to the Commonwealth will at once find support in s. 51(ii) and fall outside the operation of s. 51(xxxi) if the liability imposed is truly a tax.

1. (1951) 82 C.L.R. 547. 2. (1959) 101 C.L.R. 11, at p. 23. 3. (1958) 100 C.L.R. 246, at p. 263. 4. (1975) 133 C.L.R. 483, at pp. 494-495. 5. (1979) 142 C.L.R. 397, at pp. 407-408.

The recoupment taxes purport to be taxes. They satisfy the general conception of taxation: the compulsory exaction of money with legislative authority by a public authority for public purposes by means of contributions from individual persons not being payments for services rendered: see Cam and Sons Pty. Ltd. v. Ramsay [38] ; Matthews v. Chicory Marketing Board (Vict.) [39] ; Browns Transport Pty. Ltd. v. Kropp [40] ; Victoria v. The Commonwealth [41] . But it is said that there are features of the statutory scheme that are inconsistent with a law imposing taxation.

1. (1960) 104 C.L.R. 247, at p. 258. 2. (1938) 60 C.L.R. 263, at p. 276. 3. (1958) 100 C.L.R. 117, at p. 129. 4. (1971) 122 C.L.R. 353, at p. 416.

First, it is said that the effect of the scheme is not to impose a tax but to require the overdue company tax owing to the Crown by the company to be paid by the persons specified in ss. 5, 6 and 7 ("the accountable parties" as I shall call them) although that tax was not imposed upon them. If a law does no more than "require that moneys owing to the Crown by A be paid out of property to which B is beneficially entitled then it is not a law with respect to taxation": Federal Commissioner of Taxation v. Barnes [42] per Barwick C.J., Mason and Jacobs JJ. In so holding, their Honours cited Waterhouse v. Deputy Federal Commissioner of Land Tax (S.A.) [43] . Some of the reasoning in Waterhouse cannot now be accepted. The overthrow of the doctrine of reserved powers (which played no small part in the reasoning in Waterhouse ) means that dealings which were thought to be immune from the reach of the federal taxing power may now be selected as the subject of a tax imposed under s. 51(ii). As Taylor J. pointed out in Fairfax v. Federal Commissioner of Taxation [44] :

Unrestricted by limitations arising from the doctrine of the reserved powers of the States the power of the Commonwealth to make laws with respect to taxation stands revealed as a head of power subject to no limitations except those prescribed by the Constitution itself. Aickin J. was able to say in General Practitioners Society v. The Commonwealth [45] that "the tax power is not limited to older or well-known taxes but extends to any form of tax which ingenuity may devise". Nevertheless, the principle seems to be inherent in a majority of the judgments in Waterhouse [46] - and the principle is not affected by the reserved powers doctrine - that a provision that does no more than exact payment of a tax imposed on another is a provision dealing with a matter other than taxation. That principle was affirmed by the judgment of the majority in Barnes . Whether such a provision in invalid because it is not a law "with respect to" taxation, as their Honours held in Barnes or because, though a law with respect to taxation, it does not impose taxation and is struck down by the condition attached to s. 51(xxxi), need not detain us. It is established that such a law is outside the powers of the Parliament. Are the three Acts or any of them such a law? In my view, neither the Acts nor particular provisions of the Acts are laws of that kind. They impose a new tax calculated by reference to the company's overdue tax but giving rise to a new and different liability. The company's tax liability remains unaffected by the imposition and assessment of the recoupment taxes. The liabilities imposed respectively upon the company, vendors and promoters coexist before any payment is made. A payment of vendors recoupment tax does not reduce overdue company tax or promoters recoupment tax; a payment of promoters recoupment tax is deemed to reduce overdue company tax (s. 9(7)) and thus vendors recoupment tax (s. 9(1)); a payment of overdue company tax pursuant to an arrangement with the Commissioner affects liability for vendors recoupment tax but does not affect liability for promoters recoupment tax: ss. 20, 21. The 1982 Assessment Act thus treats as distinct the tax liability of the company, the liability for promoters recoupment tax and the liability for vendors recoupment tax. The obligation to pay a recoupment tax is distinct from an obligation to pay overdue company tax. The circumstance that payments made in discharge of one tax liability may reduce another of those liabilities is quite consistent with according the character of taxation to each of the taxes. As Kitto J. said in Moore v. The Commonwealth [47] : Separate obligations to pay money to the Commonwealth may, no doubt, be so created that each of them is a tax, notwithstanding that a payment in respect of one is to operate as pro tanto satisfying the other, and even notwithstanding that any excess of one over the other is to be refunded. (See also per Dixon J. [48] .) Upon their true construction, the three Acts do not throw upon the accountable parties the burden of paying the company's overdue tax; they oblige an accountable party to pay the tax imposed upon him. The first argument fails. 1. (1975) 133 C.L.R., at p. 493. 2. (1914) 17 C.L.R. 665. 3. (1965) 114 C.L.R. 1, at p. 16. 4. (1980) 145 C.L.R. 532, at p. 569. 5. (1914) 17 C.L.R., at pp. 671, 674-675, 678. 6. (1951) 82 C.L.R., at p. 581. 7. (1951) 82 C.L.R., at p. 568.

Next, it is submitted that the imposts are not taxes unless there be a sufficient connexion between the subject of the supposed taxes and the objects (the accountable parties) on whom the liabilities are imposed. There is a terminological difficulty in the argument. The term "subject of taxation" is not taken from s. 51(ii); it appears to be borrowed for the purpose of propounding a test of sufficient connexion from the second paragraph of s. 55 of the Constitution. The term "objects" is presumably to be understood as Higgins J. understood it in Osborne v. The Commonwealth [49] :

The prohibition contained in the second clause of sec. 55 applies only to a law containing two or more subjects of taxation. There may be as many objects of taxation - persons to be taxed - as Parliament pleases. A difficulty arises because of the imprecise denotation of the term "subject of taxation" to which Dixon J. referred in Resch v. Federal Commissioner of Taxation [50] : The expression "subject of taxation" appears to suppose that some recognized classification of taxes exists according to subject matter. But in fact that was never so. Economists and lawyers have for their different purposes referred taxes to categories, the one for their incidence and economic consequences and the other for the legal mechanism employed to secure their collection and for their operation upon the creation, transfer and devolution of rights. But these are not the considerations to which sec. 55 is directed. It is concerned with political relations, and must be taken as contemplating broad distinctions between possible subjects of taxation based on common understanding and general conceptions, rather than on any analytical or logical classification. 1. (1911) 12 C.L.R. 321, at pp. 372-373. 2. (1942) 66 C.L.R. 198, at p. 223.

If the test of validity under s. 51(ii) is the sufficiency of a connexion between a "subject of taxation" and the objects upon whom the impost is laid the relevant subject of taxation must be identified before the test is applied. What content can be given to the term "subject of taxation" in this context? In ascertaining whether a law imposes a tax, the prescribed criteria of liability must be considered. Clearly the "subject of taxation" must be found amount those criteria. For the purposes of the second paragraph of s. 55, it is possible to say of some criteria that they pertain more to a description of the subject of taxation than to the persons to be taxed (the objects). But for the purposes of s. 51(ii) the criteria pertaining to objects and criteria pertaining to the supposed subject of taxation together exhaust the indicia of a true tax, and it is difficult to see why the character of the law should not be found in the criteria as a whole. A test of sufficient connexion requires the criteria to be divided into categories of subject, object and (perhaps) connexion. No principle was advanced for placing a criterion in one category rather than another. Nevertheless, a division of the criteria of liability prescribed by ss. 5, 6 and 7 was attempted in the present case. It is convenient to limit the examination of the supposed test to the criteria prescribed by s. 5 - the section relating to the first category of vendors recoupment tax.

The plaintiffs propounded the subject of taxation to be "a company's undischarged liability to pay overdue tax and/or undis-tributed profits tax". The objects of vendors recoupment tax were taken to be the vendors of shares. The other criteria can be taken to exhibit whatever connexion there may be between the objects and the subject of taxation: liability of the company for overdue company tax (s. 5(1)(g)) calculated as though the last relevant year of income ended immediately before the last sale of shares (s. 3(10)) and an arrangement or transaction which secures or achieves the result that the company is unable to discharge its tax liability: s. 5(1)(h). Then it was said that there was an insufficient connexion between the objects and the subject of taxation because it was not necessary that the vendors of the shares be concerned in any way with, or even know of, the non-payment of overdue company tax or the entering into the arrangement or transaction which resulted in the company's inability to discharge its tax liability. But why should the liability of a company for unpaid tax be selected as the subject of taxation? It could also be said that the subject of the vendors recoupment tax is the sale of shares under a scheme (s. 5(1)(a)) carrying certain voting power (s. 5(1)(c)); or, a sale of that kind at a price in excess of the amount calculated according to the formula in s. 5(1)(d). If a sale of shares were taken to be the subject of taxation, the connexion with the vendors of the shares would be obvious and substantial. And so, if sufficient connexion were the test of validity, the selection of one criterion rather than another would or might determine the validity of the law. In my opinion, the division of criteria for the purpose of determining whether the law truly imposes taxation is artificial and erroneous. It is artificial because the selection of one criterion as the subject of taxation arbitrarily diminishes the significance of other criteria in ascertaining the character of the law. It is erroneous because the broad concept "subject of taxation" and the notion of sufficient connection with it are impermissibly translated from the context of the second paragraph of s. 55 to the context of s. 51(ii). Yet the purpose and function of s. 51(ii) and s. 55 are quite different. The first requirement of the second paragraph of s. 55 is calculated to safeguard the powers of the Senate in relation to bills imposing taxation that originate in the House of Representatives and that may not be amended in the Senate: Constitution, s. 53: Harding v. Federal Commissioner of Taxation [51] ; Resch's Case [52] ; see also National Trustees, Executors and Agency Co. of Australasia Ltd. v. Federal Commissioner of Taxation [53] . That requirement does not affect the scope of the legislative power granted to the Parliament by s. 51(ii); it affects the means by which that power is exercised.

1. (1917) 23 C.L.R. 119, at p. 134. 2. (1942) 66 C.L.R., at pp. 222-223. 3. (1916) 22 C.L.R. 367, at p. 371.

The second paragraph of s. 55 operates only upon a law which is said to impose two or more taxes. Then the question is whether a general consideration of the law "on common understanding and general conceptions" reveals two or more subjects of taxation broadly distinguishable one from another. For this purpose, Dixon J. applied a test of "sufficient connection" in Resch's Case [54] , but the way in which his Honour stated [55] the question which the test was propounded to answer treats the insufficiently connected criteria of liability as introducing a second subject of taxation, not as denying the character of taxation to either impost:

Where the main or substantial subject of the tax has thus been ascertained, then the question whether particular provisions directed at defining or widening the area or incidence of the tax or the liability to it or preventing avoidance or evasion or facilitating collection have in truth introduced a new or second subject must be determined by considering their natural connection with or relevance to the main subject. And in Waterhouse [56] , if Isaacs J. had held that the impugned provision (s. 36(2) of the Land Tax Assessment Act 1901-1911) had imposed a tax, he would have ascertained the subject of taxation by reference to all the criteria of liability. He said [57] : If the purport of the section were to impose a new pecuniary obligation, by deliberately making a husband pay a tax in respect of land which is assumed not to belong to him but to his wife alone, or as to a wife in respect of what is assumedly her husband's land, I should think that was new taxation. It would be immaterial that the tax was payable as the consequence of or contingent upon a stated event. And such an imposition could not be called a land tax. If such a new obligation were imposed either directly, or contingently, I should consider it a personal tax, or a land transfer tax, but not a land tax; and this would, in my opinion, at once bring the Assessment Act within sec. 55(2), with disastrous effect. 1. (1942) 66 C.L.R., at p. 224. 2. (1942) 66 C.L.R., at p. 223. 3. (1914) 17 C.L.R. 665. 4. (1914) 17 C.L.R., at pp. 675-676.

A search for a sufficient connexion between the subject or subjects of recoupment taxes and the objects would put us on a false trail. Whether s. 51(ii) supports the three laws as laws imposing taxation depends upon the whole of the criteria of liability which they specify. The circumstance that some of the criteria are unrelated to other criteria (if in truth they be unrelated) is immaterial to validity, for the power to impose taxation is not conditioned upon the selection of related criteria. As the taxation power extends to "any form of tax which ingenuity may devise", the Parliament may select such criteria as it chooses, subject to any express or implied limitations prescribed by the Constitution, irrespective of any connexion between them. No doubt the Parliament saw that some vendors and promoters could be caught within the net of taxation though they were innocent of any involvement in the arrangement or transaction that resulted in the company becoming unable to pay the company tax due and payable by it. That want of connexion between the criteria of liability may well be productive of injustice, but it does not deprive the Parliament of its power to make the impugned laws. If the tax is found to work injustice, the remedy is not to deny its validity; the remedy must be found in the Parliament's power of amendment.

That is not to say that the nature of criteria chosen by the Parliament is irrelevant to the character of a law which purports to impose a tax. If such a law is to escape the annihilating operation of the condition attached to the acquisition power, the criteria must stamp the impost with the character of a tax. The distinction between a tax imposed by a law supported by s. 51(ii) and a statutory exaction struck down by the condition attached to s. 51(xxxi) need not now be precisely defined, for recoupment taxes clearly fall on the taxation side of the line dividing a tax imposed under s. 51(ii) from the acquisition that attracts the operation of s. 51(xxxi). Perhaps the distinction adopted in the United Stated serves also for our purposes. There it has been held that the law must lay the impost upon the community or upon a class in the community by some rule of apportionment, while the exercise of the right of eminent domain operates on an individual without reference to the amount or value exacted from any other individual or class of individuals: People v. Mayor of Brooklyn [58] . "Eminent Domain" s4, p. 642; see also Cooley, Law of Taxation, 3rd ed. (1903), vol. 1, pp. 411-412. The Acts cannot be characterized as laws for the acquisition of property. They do not transgress any of the limitations expressed in or implied by the Constitution upon the taxation power. No feature of the statutory scheme denies to the recoupment taxes imposed by the Acts the character of true taxes. Scylla is thus avoided, but are the Acts pulled down by the Charybdis of s. 55?

The Vendors Act imposes taxation upon a "vendors taxable amount" in "an amount equal to the vendors taxable amount": Vendors Act, ss. 4 and 5. "Vendors taxable amount" is defined to mean "an amount that is a primary taxable amount or a secondary taxable amount": the 1982 Assessment Act, s. 3(1). A primary taxable amount exists in relation to a person where the criteria specified in pars (a) to (j) of s. 5(1) of s. 5(2) are met. The chief of those criteria are a sale of shares carrying more than 90 per cent of the voting power of a company for an amount exceeding the value of the net assets of the company taking account of its tax liability assessed on the basis that the company's income year ended immediately before the time of the last sale (except in relation to the distribution period in respect of Div. 7 tax), the non-payment of ordinary company tax or undistributed profits tax due and payable by the company, the entry into an arrangement or transaction (not necessarily by the vendors) that resulted in the company being unable to pay to the Commissioner all the company tax due and payable by it and the discontinuance after the time of the last sale of a business previously carried on by the company. A secondary taxable amount exists where the criteria specified in s. 6 are met. The chief of those criteria is that a vendors taxable amount exists in relation to a company or in relation to a trustee of a trust estate. Section 6 provides for the existence of a secondary taxable amount in the circumstances specified in the section in relation to persons other than the company or the trustee. Broadly speaking, the persons in relation to whom a secondary taxable amount exists are persons entitled on a distribution of the capital of the company or of the corpus of the trust estate. The effect of s. 6, when incorporated into the Vendors Act, is to widen the objects upon whom the liability for vendors recoupment tax is laid beyond those primarily liable under s. 5. However the subject of taxation is described in relation to those who become liable by reason of s. 5, it is the same subject of taxation when liability is imposed by reason of s. 6. I would hold that the Vendors Act does not deal with more than one subject of taxation and does not offend the second paragraph of s. 55 of the Constitution.

The Promoters Act imposes taxation on a "promoters taxable amount" which is defined in relation to a person or persons as meaning "an amount that is a promoters taxable amount under section 7 in relation to an eligible promoters class in which the person is, or the persons are, included": the 1982 Assessment Act, s. 3(1). The tax is imposed in an amount equal to the promoters taxable amount: Promoters Act, ss. 4 and 5. A promoters taxable amount exists where the criteria specified in pars (a) to (h) of s. 7(1) or s. 7(2) are met. The chief of those criteria are a purchase of shares in a company by a person or persons who, immediately after the purchase, is or are capable of controlling more than 90 per cent of the voting power of the company, the non-payment of ordinary company tax or undistributed profits tax due and payable by the company, the entry into an arrangement or transaction that resulted in the company being unable to pay to the Commissioner all the company tax due and payable by it and the discontinuance after the time of the last purchase of a business previously carried on by the company. A promoters taxable amount does not exceed the difference between the value of the net assets of the company immediately before the time of the last purchase and the sum of the amounts of purchase price of the shares and tax paid after the purchase but before 25 July 1982: s. 7(3). A promoters taxable amount may exist in relation to the persons in any of seven eligible promoters classes specified in s. 7(8), including the purchasers of the shares (par. (a)), their agents or brokers (par. (b)), and their associates who gave them financial assistance for the purpose of, or in connexion with, the purchase: par. (c). It was submitted that, as promoters recoupment tax was imposed upon those several classes in relation to whom a promoters taxable amount exists, the Promoters Act deals with more than one subject of taxation. Purchasers, agents, brokers and financiers are, in their several ways, involved in a purchase of shares in a company, but the activities which characterize their respective involvement and expose them to tax liability are different. Are those activities merely descriptive of the objects of the tax or do they identify different subjects of taxation? The question is not to be answered by analytical or logical classification but on "common understanding and general conceptions". The common criterion of the existence of a promoters taxable amount in relation to any person is his involvement, directly or indirectly, in the purchase of shares in a company which, as a result of some arrangement or transaction, becomes unable to pay the whole of the company tax that has become due. That common foundation of liability is a sufficient connexion among the several heads under which a person may be assessed to promoters recoupment tax to bring all heads within the same subject of taxation. The criteria to be found in s. 7 are not so diverse as to reveal that "very clear demonstration of error" which Isaacs J. thought the Court should perceive before holding that the Act dealt with more than one subject of taxation: National Trustees, Executors and Agency Co. of Australasia Ltd. v. Federal Commissioner of Taxation [1] .

Avoiding both Scylla and Charybdis, the Acts next encounter the perils of s. 23(1) which reads:

For the purposes of this Act, and a certificate signed by the Commissioner, a Second Commissioner or a Deputy Commissioner and stating that an amount of company tax specified in the certificate is due and payable by a company and that, on a date specified in the certificate, that company tax remained unpaid, is conclusive evidence of the matters stated in the certificate except in proceedings under Division 2 of Part V of the Assessment Act in relation to an assessment in respect of that company tax. By force of this sub-section, two of the criteria of liability for recoupment tax can be made incontestable except in certain objection and appeal proceedings under the Income Tax Assessment Act 1936 Cth. A certificate issued under s. 23(1) can preclude a recoupment taxpayer from challenging that an amount of company tax is due and payable and that it is unpaid - facts which are essential both to the existence of a liability for recoupment tax and to the quantification of that liability. The sub-section therefore invites consideration of what Dixon C.J. said in Deputy Federal Commissioner of Taxation v. Brown [2] : Although there is no judicial decision to that effect, it has, I think, been generally assumed that under the Constitution liability for tax cannot be imposed upon the subject without leaving open to him some judicial process by which he may show that in truth he was not taxable or not taxable in the sum assessed, that is to say that an administrative assessment could not be made absolutely conclusive upon him if no recourse to the judicial power were allowed. A conclusive certificate shrouds the statutory criteria to which it relates, substituting the existence of the certificate for the existence of the criteria. Liability assessed by reference to the certificate may differ in incidence or amount from liability assessed by reference to the actual existence of the criteria. Yet where the Parliament imposes a tax by reference to prescribed criteria, it is for the courts and not for the executive to determine whether each of those criteria exist in the particular case. The jurisdiction of the courts cannot be wholly excluded by a provision which makes the Commissioner's certificate conclusive as to the existence of a fact when the Parliament has prescribed the existence of the fact to be a criterion of the taxpayer's liability. An opportunity to obtain a judicial determination as to the existence of the fact may be validly limited (as it is under the Income Tax Assessment Act) to judicial proceedings on appeal from disallowance of an objection to an assessment, but it cannot be wholly excluded. A further objection to the validity of a conclusive certificate provision could be raised where the criterion of liability to which the certificate relates is essential to give the impost the character of a tax. In such a case, a liability imposed by reference not to the existence of that criterion but by reference to the existence of the certificate would not be an impost of the same character. However, the challenge to the validity of s. 23(1) must be founded upon the former, more general, objection. 1. (1958) 100 C.L.R 32, at p. 40.

Unless the facts in respect of which a s. 23(1) certificate may be issued are amenable, upon challenge, to some judicial determination binding upon the Commissioner and the taxpayer, the sub-section is invalid. The 1982 Assessment Act does not allow for judicial determination of any of the facts covered by a s. 23(1) certificate in appeals in relation to an assessment to recoupment tax. The amount of company tax to which a company is assessed may be challenged in an appeal against that assessment but, for the purposes of the 1982 Assessment Act, only upon appeal by those recoupment taxpayers who are referred to in s. 18. If a s. 23(1) certificate is issued, a recoupment taxpayer who is not among those given a right of objection and appeal in relation to the liability of the relevant company to pay company tax cannot challenge the existence or amount of that liability. If such a certificate is issued and is not withdrawn, no recoupment taxpayer in proceedings in relation to an assessment to recoupment tax can challenge the fact that the company tax liability of the company is due and payable or that the amount of that liability has not been paid. A certificate issued under s. 23(1) shrouds those facts impenetrably.

Therefore s. 23(1) is invalid, and sub-ss. (2) and (3) fall with it. However, s. 23 is clearly severable. Section 23 would facilitate proof of the existence of criteria, in aid of the application of the substantive provisions of the Act to particular cases. Shorn of the invalid section, the remainder of the Act is unaffected in its operation and effect: see s. 15A, Acts Interpretation Act 1901 Cth; Bank of N.S.W. v. The Commonwealth [3] . As the validity of the other provisions of the 1982 Assessment Act is unaffected by the invalidity of s. 23, the validity of the Vendors Act and the Promoters Act is also unaffected.

The demurrers should be allowed, and the actions dismissed with costs.