Working vacationers may be entitled to generous refunds worth hundreds of millions after a British woman won a historic lawsuit against the Australian tax office.
Catherine Addy, a 27-year-old British drama student from London, initially came to Australia in 2015 on vacation in Cairns and Brisbane before renting in Sydney.
Four years after arriving in Down Under, Ms. Addy won a fight with a federal court with a judge who convicted the Australian tax office for discriminating against British citizens.
Thousands of backpackers may soon be entitled to generous refunds worth hundreds of millions after a British woman has won a historic lawsuit against the Australian tax office
She will be reimbursed more than $ 2,200, while the ATO has still not decided whether to appeal the judgment.
The decision can have major consequences for the 80,000 working holiday makers who live in Australia and not just for a few weeks.
If Mrs. Addy's $ 2,200 payout were handed over to the 80,000 working holidaymakers in the country, the government would look at a $ 176 million bill.
Tax Advisor H&R Block & # 39; s Director of Tax Communications Mark Chapman described Justice John Logan's verdict as a milestone result that thousands of working vacationers could get tax refunds – up to thousands of dollars for individuals.
& # 39; In the context of these working vacationers, this is a very important judgment, & he said to Daily Mail Australia.
& # 39; There are many. There would be tens or even hundreds of thousands here on this working vacationer's visa and some of them would actually qualify as residents based on their circumstances. & # 39;
Under the laws that were introduced in January 2017, visitors on working holiday visas were no longer entitled to a tax exemption for the first $ 18,200 they earned.
Catherine Addy, a 27-year-old British citizen from London, initially came to Australia in 2015 on vacation in Cairns and Brisbane before renting in Sydney
Instead, they have to pay 15 percent tax on every dollar they earn up to $ 37,000 if they hold a 462 or 417 visa.
However, visitors to Australia are entitled to the $ 18,200 tax-free exemption if they live at a permanent address in Australia, making them tax residents.
In the case of Addy, Justice Logan accepted that renting from a share house in Earlwood in the interior of Sydney meant that she should not have paid $ 3,100 tax on the $ 20,686 she earned during the 2016-17 financial year.
The ruling means she is entitled to a refund of more than $ 2,200.
In his destructive judgment, he accused the ATO of focusing on Mrs. Addy, a drama student, because she was British.
Four years after arriving in Down Under, she won a fight by a federal court with a judge convicting the Australian tax office for discrimination against Poms
& # 39; That's a disguised form of discrimination based on nationality & # 39 ;, he said in his judgment, published on Wednesday.
Mrs. Addy, originally from Bexleyheath, in southeast London, came to Australia in 2015.
The following year she worked at a horse farm in Western Australia before the next year she worked casually as a waitress in the Menzies and Novotel hotels in Sydney.
After being dissatisfied with the tax authorities, she started legal proceedings at the Federal Court last year.
Mr. Chapman said that many H&R Block customers were working vacationers who were unfairly charged.
Mrs. Addy, originally from Bexleyheath, in southeast London, came to Australia in 2015
& # 39; We have had a steady procession of these people through our doors arguing that this tax rate is not fair, & # 39; he said.
& # 39; All those people, if this judgment persists, will have reason to go back to the ATO and say, "Thank you very much, you are wrong with our tax, we have our extra refund please". & # 39;
An ATO spokeswoman said the tax office had yet to decide whether to appeal against the decision of the Federal Court.
& # 39; The ATO will consider this decision and whether an appeal is appropriate, & # 39; she said.
She added that it is unlikely that the vast majority of working holiday makers who do not live in Australia will be affected.
In the case of Addy, Justice Logan accepted that renting from a share house in Earlwood in the interior of Sydney meant that she should not have paid $ 3,100 tax on the $ 20,686 she earned during the 2016-17 financial year. The ruling means she is entitled to a refund of more than $ 2,200
"We do not consider most vacationers as residents for tax purposes and this decision does not affect these vacationers."
& # 39; This decision only affects the tax rates that apply to a minority of WHMs who are also residents, and only to countries from countries affected by a similar clause in the double taxation agreement with their home country & # 39;
Like Australian citizens, working vacationers who are residents for tax purposes do not pay taxes on the first $ 18,200 they earn, but pay 19 cents in the dollar for amounts between $ 18,201 and $ 37,000.
On Census evening in 2016 there were 129,442 working holiday makers in Australia, of which 78,763 were residents with another 50,680 foreign visitors.
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