British waitress wins legal battle against Australia’s ‘backpacker tax’

1 month ago 23

A British backpacker who worked arsenic a waitress successful Sydney has won a long-running ineligible quality against Australia’s “backpacker tax” successful its highest court.

On Wednesday the precocious tribunal ruled successful favour of Catherine Addy, uncovering the taxation which slugged moving holiday-makers thousands of dollars much than Australians discriminated against her connected the ground of her nationality and infringed a pact Australia signed with the UK.

The determination apt means the Australian Taxation Office volition person to wage backmost taxes collected from up to 75,000 backpackers who worked successful Australia, which has akin treaties with the US, Germany, Finland, Chile, Japan, Norway and Turkey.

In December 2016 Australia legislated the backpacker tax charging moving holiday-makers 15% connected the archetypal $37,000 they gain a year, a maximum liability of $5,550. Australians are entitled to a tax-free threshold for the archetypal $18,200 they gain and are lone liable to wage up to $3,572 if they gain $37,000.

Addy spent astir 2 years successful Australia betwixt August 2015 and May 2017, earning $26,576 arsenic a nutrient and beverage waitress successful Sydney successful the 2017 taxation year.

In October 2019 Addy won a situation successful the national court arguing the taxation discriminated against her connected the ground of nationality and breached the Australia-UK pact connected avoidance of treble taxation. In August 2020 the afloat national tribunal overturned the decision.

Addy appealed to the precocious court, arguing that if the backpacker taxation had applied for the afloat twelvemonth she earned $26,576, she would person been slugged $3,986 compared with an Australian who would wage conscionable $1,591.

On Wednesday 5 justices of the precocious tribunal unanimously allowed Addy’s appeal, uncovering that “more burdensome taxation” had been imposed connected her owed to her nationality.

“When the presumption of Ms Addy is compared with that of an Australian national, arsenic it indispensable be, that is the lone decision which whitethorn beryllium drawn,” they said.

“She did the aforesaid benignant of enactment and earned the aforesaid magnitude of income from the aforesaid source; yet an Australian nationalist was required … to wage little tax.”

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The ATO has antecedently downplayed the value of the case, arguing it “only affects the taxation rates applying to a number of [working vacation makers] who are besides residents, and lone those from countries affected by a akin clause successful the treble taxation statement with their location country”.

“We see astir moving vacation makers are not residents for taxation purposes and this determination has nary interaction for these moving vacation makers,” the ATO said successful October 2019.

Joanna Murphy, the main enforcement of Taxback.com, an planetary taxation accounting and advisory steadfast that helped Addy bring the case, welcomed the precocious tribunal decision.

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“The tribunal has reaffirmed important protections for overseas citizens choosing to enactment portion holidaying successful Australia,” Murphy said successful a statement.

“It was ever wide to america erstwhile this taxation was introduced successful 2016, against the wishes of the cultivation sector, that it breached a fig of planetary taxation agreements.

“It besides damaged Australia’s estimation arsenic a moving vacation destination.”

Guardian Australia contacted the ATO for comment.