Foreign backpackers who worked in Australia could be entitled to an average tax refund of $ 2,600 after a historic court decision – depending on where they come from.
John Logan, judge of the federal court, introduced the & # 39; backpacker tax & # 39 ;, in 2017, as & # 39; disguised discrimination & # 39; slammed after he agreed with 27-year-old London drama student Catherine Addy & # 39; s case against the Australian tax office.
The Irish global tax refund group Taxback said that British tourists on work visas would be reimbursed on average £ 1,400 or $ A2600.
This can have an impact on 80,000 visitors to working holiday visitors who also live in Australia.
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Foreign backpackers who worked in Australia may be entitled to an average tax refund of $ 2,600 following a decision from a historic court – depending on where they come from (pictured are backpackers who work casually on road projects in the Northern Territory)
Joanna Murphy, CEO of Taxback, said that visitors from the UK, US, Germany, Finland, Chile, Japan, Norway and Turkey were probably entitled to tax refunds because their home countries had signed treaties with Australia.
Justice Logan on Wednesday ruled that the backpacker tax was invalid because Australia had made agreements with these countries to prohibit unequal tax treatment with its citizens compared to Australians.
"We think it was very clear when the tax was introduced in 2016 that these foreign workers discriminated and violated several international tax agreements," Murphy said.
& # 39; It has also damaged Australia's reputation as a working holiday destination.
& # 39; We are pleased that the court has accepted our argument and look forward to the Australian government restoring the previous and fairer tax regimes that apply to vacationers. & # 39;
The & # 39; backpacker tax & # 39 ;, which came into effect in January 2017, prevented visitors from working holiday visas from being entitled to tax exemption for the first $ 18,200 they earned.
John Logan, judge of the federal court, introduced the & # 39; backpacker tax & # 39 ;, in 2017, as & # 39; disguised discrimination & # 39; slammed after he agreed with 27-year-old London drama student Catherine Addy & # 39; s (photo) case against the Australian tax office
Instead, they had to pay 15 percent tax on every dollar they earned up to $ 37,000 if they had a 462 or 417 visa.
However, visitors to Australia were entitled to the $ 18,200 tax-exempt exemption if they lived at a permanent address in Australia, making them tax residents.
However, the ATO has overlooked this situation for some working visa holders, including Mrs Addy, a British citizen.
In the case of Mrs. Addy, Justice Logan accepted that renting from a share house in Earlwood in the interior of Sydney meant she should not have paid $ 3,100 tax on the $ 20,686 she earned during the 2016-17 financial year before returning to London .
The & # 39; backpacker tax & # 39 ;, which entered into force in January 2017, prevented visitors on working holiday visas from being entitled to a tax exemption for the first $ 18,200 they earned (pictured is Catherine Addy on holiday in Australia)
She started legal action against the ATO in 2018.
The ruling in her favors 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 from Bexleyheath in southeast London because she was British.
& # 39; That's a disguised form of discrimination based on nationality & # 39 ;, he said in his judgment, published on Wednesday.
Mrs. Addy initially came to Australia in 2015 for a work visa, on vacation in Cairns and Brisbane before renting in Sydney.
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
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.
Her victory in the Federal Court could have major benefits for the 80,000 working vacationers who live in Australia and not just for a few weeks.
If Addy's $ 2,200 payout were handed over to the 80,000 working holidaymakers in the country, the Australian government would look at a $ 176 million bill.
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.
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
She added that it is unlikely that the vast majority of working holiday makers who do not live in Australia will be affected.
"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;
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.
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
& # 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 holiday visas and some of them would actually qualify as residents based on their circumstances. & # 39;
Mr. Chapman said that many H&R Block customers were working vacationers who were unfairly charged.
& # 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;
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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