Controversial 'Backpacker Tax' Has Been Challenged in the Federal Court of Australia
Do you dream about backpacking around Australia? Or have you spent some time there on a working holiday? If so, you might have caught wind of the Australian government's controversial 'Backpacker Tax'.
Since its introduction in January 2017, this tax has formed a big grey cloud over Australia's white sandy beaches and non-stop sunshine for thousands of backpackers and aspirational working holidaymakers. And since backpackers contribute an estimated $3.5bn per year to Australia's economy, it's a pretty big deal.
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So, what's all the fuss about and how does it affect working holidaymakers?
This troublesome tax infringes on the rights of foreign workers in Australia. In fact, it breaches non-discrimination clauses, built into tax treaties that Australia has signed with the UK, the US, Germany, Finland, Chile, Japan, Norway and Turkey.
These clauses are there to make sure that there is no unequal tax treatment of citizens of these countries and that includes working holidaymakers. They exist to protect foreign workers rights.
The law imposes a much higher rate of tax for foreigners who are on 417 or 462 visas (most commonly used by backpackers). Basically, it infringes on the rights of foreign workers in Australia. Not to mention the fact it will likely tarnish Oz's reputation as a working holiday destination, which may, in turn, negatively affect the already significant shortage of seasonal and agricultural workers. Seeing as there has been a recent decline in the number of backpackers visiting Australia, this problem will only worsen.
Commercial Director for Taxback, Eileen Devereux believes there are three reasons why the Backpacker Tax is flawed;
"Firstly, the tax is discriminatory towards foreign workers. Secondly, it is in breach of a number of Australia's international tax agreements. And finally, it also damages the international reputation of Australia's tourism sector."
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Taxback fighting for your rights!
Taxback is an international tax accounting firm that provides global tax refund and tax return services for up to 13 countries. It's our clients who are so sorely impacted by this tax.
That's why Taxback decided to challenge the law on behalf of globetrotters and working holidaymakers from the eight affected countries. The case against the federal government which took place earlier this month appears to have yielded positive results, meaning there's a good chance that the changes will be rolled back.
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What does this mean for Australian backpackers?
Taxback are seeking the removal of the Backpacker Tax for citizens of the eight affected countries. Achieving this will ultimately mean that working holidaymakers from these countries will be entitled to a significant Australian tax refund for any tax they paid while on their working holiday visas.
Say the changes are rolled back, if you claimed an Oz tax refund already, you'll be able to reclaim and should get a much larger refund. If you didn't file a tax return for whatever reason, maybe you owed money to the ATO or you just didn't bother, you may also be entitled to a significant tax refund, the average tax return for Australia is $2,600.
If you or anyone you know has been affected by the Backpacker Tax, be sure to sign up for updates using the button below.
And remember, a verdict is expected to be released in early March so keep an eye for more information. Register now and be among the first to receive what you are due!
If you'd like to be notified about the Australian backpacker tax court case...
If you were previously working as a backpacker in Australia, you can use our tax return estimator to find out if you are due a tax refund in Oz.
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