A British woman on Wednesday won a lengthy legal fight against Australia’s “backpacker tax”, after the country’s top court agreed the levy discriminated against foreigners on working holiday visas.
Catherine Addy, who had worked in Sydney in 2017, took her battle against the levy all the way to Australia’s High Court, which unanimously ruled in her favour — putting potentially thousands of other backpackers in line for a tax refund.
From 2017, Canberra applied a 15 percent levy for every dollar earned for two categories of working holiday visas linked to seasonal labour.
Australians begin paying tax once their annual income exceeds Aus$18,200 (US$13,500). That was also the threshold for working holiday visas before it was changed.
In a landmark decision two years ago, a Brisbane court had ruled the so-called “backpacker tax” could not be applied to Addy due to a double taxation treaty between Australia and the UK.
The presiding judge at the time called it a “disguised form of discrimination”.
That earlier decision was overturned by the Federal Court, which sided with the Australian Taxation Office, before Addy’s lawyers appealed to the country’s top court.
“An Australian national deriving taxable income from the same source during the same period would have been taxed at a lower rate,” the High Court said Wednesday.
“The more burdensome taxation was imposed on Ms Addy owing to her nationality.”
The Australian Taxation Office said the decision was expected to impact decision working holidaymakers from the United Kingdom, Japan, Germany, Chile, Turkey, Finland, Norway and Israel who were also Australian residents for tax purposes.
“Most working holidaymakers will be non-residents as they are in Australia to have a holiday and working to support that holiday,” the agency said in a statement.
“This decision will not change the tax rates for the majority of working holidaymakers.”
In Addy’s case, she lived mainly in a Sydney sharehouse and stayed for the most part in the state of New South Wales — meaning she was considered a “resident” for tax purposes in Australia.
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