The ‘Backpacker Tax’ could be on the way out.
In a landmark court ruling, Australia’s ‘Backpacker Tax’ will no longer be applied to citizens of eight countries who come to the country to work.
The action against the tax was initiated by Irish company Taxback.com, who say that this ruling could have a major impact for Irish people planning to travel for working holidays to Australia.
The 15% tax rate applied to people on 417 or 462 working holiday visas. This rate was applied to all income up to AUS$37,000, which meant that these visa-holders were paying more tax on average than Australian citizens.
The High Court unanimously agreed that this tax rate was against tax treatises that Australia had signed with eight countries in recent history.
These eight countries are the UK, US, Germany, Finland, Chile, Japan, Norway and Turkey. Citizens from these countries make up 50% of all 417 and 462 visa holders.
Speaking about the potential impact this ruling could have on Irish travellers in Australia, Joanna Murphy, CEO of Taxback.com, said: “Today’s judgement comes after four years of hard work behind the scenes between Taxback.com and our legal counsel and we are glad to be able to finally draw a line under the court proceedings.
“However, we will continue to lobby for the judgement to be applied across the board, and we are confident that today’s outcome will positively impact Irish backpackers in the near future, based on the fact that tax treatment of backpackers is usually common regardless of which country they come from.
“The indication is that the Australian Tax Office (ATO) will now have to consider the position of all working holiday visa holders and amend how the Backpacker tax is applied to all foreign travellers. Travelling and working around Australia has long been a rite of passage for Irish people – 37,041 Working Holiday (417) Visas have been issued to Irish people since 2017, when the tax originally came into effect.”
Backpackers are estimated to contribute around $3.5 billion to Australia’s economy each year.
More information on the Australian Working Holiday Visa can be found here.
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