October 31, 2019

Anna Murray 

In 2017, Australia has imposed a so-called "backpacker tax" with a 15% tax rate on working holidaymakers. Under the backpacker tax, foreign workers in Australia, considered non-residents, are taxed 15% on all income up to US$37,000 (£19,750). Meanwhile, local residents need not pay any tax with yearly income below AU$18,200 (US$12,500, £9,700) and pay 19% up to an income of US$37,000 (£19,750).

A lawsuit was specifically challenged by Taxback.com, a tax-specialist firm providing services of tax refund and tax return across 12 countries, on behalf of a British drama student, Catherine Addy, who worked during her tour in Australia between 2015 and 2017. CEO Joanna Murphy at Taxback.com of Ireland said the backpacker tax enacted in 2016 had breached several international agreements.

On October 30, the Federal Court of Australia in Brisbane ruled the backpacker tax is in breach of existing treaties with 8 countries: Chile, Germany, Finland, Norway, Japan, Turkey, UK, and the US. Judge John Logan adjudicated the tax as a disguised form of discrimination based on nationality. Therefore, the tax could not be applied to those citizens who had been employed on category 417 or 462 visas.

Catherine Addy is now due a £1,100 tax rebate after the landmark ruling in her favor. It is estimated that more than 150,000 foreign tourists in Australia each year are on working holiday visas. Mostly they are working in the farming and hospitality industries. To comply with the ruling, the Australian government shall refund hundreds of millions of dollars to tens of thousands of foreign nationals working with holiday visa in Australia since 2017.

Photo:Webshot.