Dissenting judgment creates interest

The decision in Vanderstock v Victoria [2023] HCA 30 (Vanderstock) was delivered in October 2023 and has caused quite a stir among the pointy heads of the tax profession (including among our own Revenue Law Committee).

Why this case is generating so much interest is not so much the outcome of the decision or the rationale of the plurality itself, rather it has been the dissenting judgment of Edelman J and his willingness to list state taxes which are now potentially constitutionally invalid.  

Key aspects

Vanderstock concerned the constitutional validity of the Victorian Zero and Low Emission Vehicle Distance-Based Charge Act 2021 (Vic) which imposed a charge on registered operators of zero or low emissions vehicles (ZLEV) for their use on certain specified roads.

The key question for the High Court was whether the ZLEV charge was an excise within the meaning of section 90 of the Constitution. That is, section 90 provides the Federal Government with the exclusive rights to impose excises and any State based excise is consequently constitutionally invalid. An excise being a tax on goods.

The plurality held that the ZLEV charge was an excise because (amongst other reasons) it had the impact of effecting decision making processes when consumers determined whether or not to buy a ZLEV (ie the consumption of goods). This significantly expanded the traditional view of what an excise was.

Vanderstock has caused so much of a stir for two main reasons:

  • This expanded view of what constitutes an excise has the potential to effect any state-based tax that “affects” consumption of goods; and
  • Edelman J in his Honour’s judgment listed some taxes which this change has the potential to affect which included:

a payroll tax directly affecting a market for the sale of labour; an industrial tax directly affecting a market for the sale of industrial land; a tax directly affecting a market for the sale of a business; or a tax directly affecting a market for the sale of services…..

What are the practical implications?

Vanderstock has called into question the validity of many state taxes (payroll tax, land tax, vehicle registration and transfer duties, royalties, gaming machine and betting taxes, toll roads, waste disposal levies and some stamp duties) either wholly or at least partially.

Whilst there is a level of schadenfreude contemplating the avalanche of tax refund claims which will follow the invalidity of many of the less popular state taxes, there are some practical hindrances to be aware of.

Limitation on the recovery of an invalid tax

Section 10A of the Limitation of Actions Act 1974 (Qld) (LAA) requires that actions for recovery where a tax be commenced within 1 year of payment where the relevant tax is invalid.

Accordingly, taxpayers should be aware (or at least be made aware) that there is the possibility of certain State taxes being invalid (noting the extent of the invalidity remains uncertain) at time of payment and noting they may be limited in their recovery action if the relevant tax is held to be invalid more than 1 year after payment.


There may be technical arguments whether this type of provision relating to the 1 year limitation on recovery is itself constitutionally invalid or otherwise ineffective (see for example the discussion at paragraph 33 of Dawson and Toohey JJ reasons in Mutual Pools and Staff Pty. Limited V The Commonwealth of Australia (1994) 179 CLR 155, as well as the decision of the High Court in British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30).


Section 36 of the Taxation Administration Act 2001 (Qld) (TAA) has now removed the ability to claim restitution for the overpayment of tax. Accordingly taxpayers are further limited in scope for recovery in the event of a State tax being held to be invalid.


The re-assessment provisions in the TAA are likely to be equally unhelpful for taxpayers in light of section 10A of the LAA above. Whilst the TAA usually provides a 5 year limitation period for a refund under a reassessment (provided in section 37 of the TAA), that is subject to the LAA provisions.

Moreover in order to obtain a reassessment, an objection would need to be lodged and any objection received 60 days after the original assessment may be accepted only at the discretion of the Commissioner.


So where to from here?

Moving forward some practical takeaways for taxpayers and their advisers are:

  • taxpayers should be made aware that some state taxes are open to challenge and be made aware that there is practically only a one-year period from the date of payment for recovery where the tax is invalid;
  • taxpayers should be directed to or given the opportunity to seek their own specialist advice whether their specific tax liability is unconstitutional (whether the taxpayer choses to obtain this advice is up to them); and
  • advisers should be aware that for the vast majority of taxpayers, challenging the constitutional validity of a state tax will be commercial and practically untenable. However, decisions regarding challenging the validity of a state tax a taxpayer is a matter form them on which they will want the opportunity to make an informed decision.

The QRO’s current view of Vanderstock, conveyed to members of our QLS Revenue Law Committee, is that the case is confined to its facts and is of no application to Queensland state taxes.

It should also be noted that the Federal Treasurer has also recently issued a ‘Council on Federal Financial Relations Statement’ in which he noted that a Federal legislative ‘fix’ was introduced following a previous constitutional challenge to various business franchise fees on tobacco, alcohol, and petroleum products in the states.

The Commonwealth tax imposed under that legislation applied to claims for refunds in respect of those state taxes collected before the challenge. The Treasurer has made it clear that the Commonwealth will consider similar actions, if required in future.

Tom Walrut is a member of the QLS Revenue Law Committee, which assisted with this article.

Share this article

Leave a Reply

Your email address will not be published. Required fields are marked *

Search by keyword