Australia: High Court rules 'backpacker tax' unfair

British national Catherine Addy won her case at Australia's High Court on Wednesday, as judges found that the country's so-called "backpacker tax" is discriminatory against foreign residents.

"The tax rate was more onerous for Ms. Addy, a national of the United Kingdom, than it was for an Australian national in the same circumstances – doing the same work, earning the same income," the judgement said.

Australia's so-called "backpacker tax" was put in place in 2017. Despite agreements with the United Kingdom and other countries that foreign workers would not face a higher tax burden, the law stipulated that those employed in the country under a work-travel visa for young people would face a higher tax rate than Australian locals.

According to broadcaster ABC, Addy had argued that she should have enjoyed the first A$18,200 ($13,548) of her earnings tax-free, like all Australians do. Instead, she paid a 15% flat rate for the five months she worked as a waitress in Sydney.

Judgement comes as Australia readies to open border

The Australian Taxation Office said it was still reviewing the decision but that it did not expect it to affect the majority of working backpackers. It said it would only affect those backpackers deemed residents for tax purposes who were also from countries with bilateral tax accords with Australia: the UK, Japan, Germany, Chile, Turkey, Finland, Norway and Israel. 

"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."

The judgement came as Australia is considering how to re-open its borders to foreign nationals for the first time since the coronavirus pandemic began.

es/msh (AFP, Reuters)