FEBRUARY 4 — G Global 120E T2 Pty Ltd and G Global 180Q Pty Ltd (GG Entities) owned land in Queensland, a state in Australia but both companies were owned and controlled by a company incorporated in Germany.
Francis Stott, on the other hand, owned land in Victoria, another state in Australia. He is a New Zealand citizen.
GG Entities received land tax assessments that included surcharges imposed because they were foreign for the purposes of the relevant land tax regimes.
They appealed against assessments of land tax made under the Queensland Land Tax Act 2010 (LTA) for the 2020-2021 and 2021-2022 financial years, on the basis that the imposition of the additional land tax on them was contrary to the non-discrimination provisions of the Double Tax Agreement between Australia and Germany (the German DTA).
The German DTA includes Article 24(5) which states that “Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected.”
Stott received similar land tax assessments under the Victoria LTA for the 2016 to 2024 tax years. He similarly contended that the imposition of the additional land tax was contrary to the provisions of the non-discrimination provision in the Australia and New Zealand Double Tax Agreement (the New Zealand DTA).
Australia has equivalent DTAs with other countries, such as India and Switzerland.
The DTAs have a force of law by reason of Section 5(1) of the International Tax Agreements Act 1953 (ITA), which is a federal law. The Queensland LTA and Victoria LTA are state law.
Australia is a federation of six states, including Queensland and Victoria.
The Australian Constitution establishes a federal system of government in which legislative powers are distributed between the federal parliament and the six state parliaments.
Section 109 of the Australian Constitution provides that “when a law of a State is inconsistent with a law [passed by the federal parliament], the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.”
In simple words, if a state parliament and the federal parliament pass conflicting laws on the same subject, then the federal law overrides the state law.
Conflicts do happen. When they do, they are usually resolved through the legal system.
The High Court of Australia (HCA) – the apex court of the country – is empowered to resolve conflicts between federal and state law or laws.
The HCA was accordingly asked to answer whether the provisions of the Queensland LTA and Victoria LTA were invalid by reason of inconsistency with Section 5(1) of the ITA by the operation of Section 109 of the Australian Constitution.
The HCA’s short answer was “Yes”. The answer was delivered only three months ago in October 2025. (See G Global 120E T2 Pty Ltd v Commissioner of State Revenue and other cases [2025] HCA 39)
The legal position is this:
When it is sought to apply Section 109 of the Australian Constitution, then the question that must be asked is whether there is any inconsistency between the relevant state law and the relevant federal law.
If there is, then under Section 109 the state law is inoperative to the extent of the inconsistency. If there is not, then Section 109 has no operation and it matters not how the inconsistency comes about.
The legal position is not unlike in Malaysia under the Federal Constitution.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
