South Australia v Commonwealth (1942) 65 CLR 373 (“First Uniform Tax Case”)

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  • During World War II, the Federal Government needed more revenue to support the war effort.
  • In 1942, income taxes were raised by both State and Commonwealth governments.
  • The Commonwealth wanted the States to transfer their taxation powers to the Commonwealth until the war’s end.
  • The Commonwealth would give grants to the State (under section 96 of the Constitution) to assist with the lost revenue.
  • The States did not want to do this.
  • Section 51(ii) of the Constitution only permits the Commonwealth to impose Federal taxation for Federal purposes; the power does not permit the Commonwealth to cover the field of taxation with any law.
  • The Commonwealth nevertheless introduced a uniform income tax by enacting four pieces of legislation.
    • The Income Tax Act 1942 (Cth), raised income tax levels to the existing State levels. It made it politically impossible for states to impose their own income taxes;
    • The States Grants Act 1942 (Cth), provided a grant for each State equal to what it would have raised on its own income tax, on the condition that it did not raise its own income tax;
    • Section 221 of the Income Tax Assessment Act 1942 (Cth), required taxpayers to meet their Commonwealth tax liabilities before state tax liabilities; and
    • the Income Tax (Wartime Arrangements) Act 1942 (Cth), required the States to transfer to the Commonwealth all the State staff, offices, resources and records which were used to collect income tax.
  • South Australia, Victoria, Queensland and Western Australia appealed to the High Court.


  • Was the Uniform Tax Scheme a valid exercise of power under section 51(ii) of the Constitution?


  • The High Court held that the Uniform Tax Scheme was valid.
  • The Income Tax Act was valid because the taxation power is a non-purposive power; because the subject matter of the Act was taxation, it was valid under section 51(ii) of the Constitution.
  • The section 96 grants power can be used to induce a State to use or abstain from using its own powers, provided it is not coercive.
  • Section 221 of the Income Tax Assessment Act 1942 (Cth) was valid because the subject matter was taxation.
  • The Income Tax (Wartime Arrangements) Act 1942 (Cth) was held valid under section 51(vi) (“defence power”).

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