The High Court has unanimously dismissed a challenge brought by Fortescue Metals Group Limited as to the constitutionality of the Minerals Resource Rent Tax.

The case

Fortescue Metals Group Limited and four of its wholly owned subsidiaries (Fortescue) argued that certain provisions of the Minerals Resource Rent Tax Act 2012 (Cth) and the three related Acts imposing the MRRT (MRRT Acts) are not valid laws of the Commonwealth because they operate so that a miner’s liability to pay MRRT varies from State to State, depending (among other things) upon the royalty rate for mining royalties applicable in each State.

Fortescue therefore challenged the constitutional validity of the MRRT Acts on the following four grounds:

  • That the MRRT Acts are laws with respect to taxation that discriminate between the States contrary to section 51(ii) of the Constitution.
  • That the MRRT Acts, as laws or regulations of trade, commerce or revenue, give preference to one State over another State contrary to section 99 of the Constitution.
  • That the MRRT Acts interfere with the States’ ability to manage their mineral resources and in doing so, contravene the Melbourne Corporation doctrine, which prevents the Commonwealth from making laws which restrict the capacity of State governments to function as governments.
  • That the MRRT Acts are inconsistent with section 91 of the Constitution, which preserves a State’s power to grant an aid or bounty on the mining for gold, silver or other metals.

The High Court’s decision

The High Court unanimously dismissed each of Fortescue’s arguments and in doing so, upheld the validity of the MRRT Acts and therefore the MRRT. The High Court found that the treatment of State mining royalties by the MRRT Acts does not discriminate between the States or give preference to one State over another State and therefore the MRRT Acts do not contravene sections 51(ii) or 99 of the Constitution. Further, the High Court found that the MRRT Acts do not contravene either the Melbourne Corporation doctrine or section 91 of the Constitution.