Legal action has been taken on behalf of working holidaymakers from eight countries.
A controversial tax on backpackers in Australia has been brought into question by Irish company Taxback.com, who have initiated legal action against the federal government in Australia on behalf of working holidaymakers from eight countries.
The company argues that the Backpacker Tax, introduced in January 2017, contravenes non-discrimination clauses built into tax treaties that Australia has signed with eight countries: the United Kingdom, USA, Germany, Finland, Chile, Japan, Norway and Turkey.
Following the introduction of the backpacker tax, all working holidaymaker earnings are taxed at 15%; prior to the introduction of the tax earlier this year, working holidaymakers were eligible to earn up to AUD $18,200 tax-free.
As well as taking legal action, Taxback.com have also agreed to enter into dialogue with the Australian Government in an effort to resolve the issue outside court.
Taxback.com Commercial Director, Eileen Devereux, said that the introduction of the tax has had major implications, particularly for Irish people, and that the action was an important step to protect foreign workers and Australia’s reputation as a working holiday destination.
“Travelling to Australia to work has long been a firm favourite of Irish workers and the tax changes have hit them hard financially. For the year, ended 30 June 2016 6,743 Irish nationals were issued a 417 visa for Australia.
“As our challenge stands at present Irish backpackers would be unaffected. Our challenge is with respect to eight other nationalities who have double taxation agreements, which include non-discrimination clause, which Ireland does not have, however we would be hopeful that if the case were successful for the eight countries in question that the Australian Government would extend this to the additional nationalities who avail of the 417 and 462 visa programs.”
“Having lodged our pre-action letter, we have been extremely encouraged by the willingness of the Australian Government to come to the table for talks,” Devereux added.
“It is our preference to resolve this issue through a mediated solution and we look forward to collaborating on this. By discriminating against foreign workers the tax is fatally flawed.
“There’s no doubt that the Backpacker Tax has left a sour taste in the mouths of many visitors, and that can only harm Australia’s ability to attract visitors in future. This is why we are asking the Australian Government to reconsider its position on this matter.”
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