Press "Enter" to skip to content

High Court discrimination battle over Australia’s ‘backpacker tax’

mye455y 0

An English backpacker who worked as a waitress in Sydney has won her battle over the so-called backpacker tax in the High Court.

Key points:
British national Catherine Addy argued a tax imposed on her as a backpacker discriminated against her on the basis of her nationality
Foreign nationals in Australia on 417 and 462 visas are subject to a 15 per cent tax on income and are not eligible for the tax-free threshold
The High Court ruled in Ms Addy’s favour — a decision likely to be closely watched by other foreign workers
The woman claimed she had been discriminated against because of her nationality when she was made to pay tax at a different rate to Australian residents.

Under an agreement between Britain and Australia backpackers paid a flat rate, without the benefit of the tax-free threshold.

Other backpackers caught by the same rule have been waiting on the decision.

Backpackers claim tax ‘at odds’ with international agreement
The tax was introduced in 2017 and applies to holders of 417 and 462 visas, which allow young people between 18 and 31 to travel to Australia for a working holiday.

Close-up of a hand pouring a beer from a bar tap.
The British former waitress challenged the decision to tax her under the backpacker tax, instead of as a resident of Australia.(ABC News: James Carmody)
Catherine Addy, the woman behind the legal action, worked as a waitress in two Sydney hotels earning $26,576 between January 2017 and May 2017, when she left Australia.

Ms Addy challenged the decision to tax her a flat rate of 15 per cent under the backpacker tax, instead of as a resident of Australia, who would have access to the tax-free threshold.

Ms Addy argued the tax was at odds with an international “double tax” agreement Australia has with Britain and a number of other nations.

That agreement prohibits discrimination on the basis of nationality, by stating foreign nationals should not be taxed in a more “burdensome” way than locals in a similar position.

The High Court ruled in Ms Addy’s favour, finding she had been worse off.

“In the present case, the application of the ordinary taxation laws – the basis of the charge and the method of assessment in relation to the taxable income of Australian nationals and nationals of the United Kingdom in the same circumstances – was the same, but the tax rate was not,” the unanimous judgement said.

Leave a Reply

Your email address will not be published. Required fields are marked *