An ill-conceived tax on backpackers, long hated by the tourism industry and primary industries alike, was yesterday overturned by Australia’s Federal Court, with holiday workers likely to receive hundreds of millions of dollars as a result.
The landmark court ruling found the Federal Government’s controversial “backpacker tax” cannot lawfully be applied to citizens from eight foreign countries. It seems unlikely it can be applied to citizens of any country.
The ABC reported yesterday that an estimated 75,000 backpackers could receive hundreds of millions of dollars from the Tax Office after the Federal Court ruled the Government’s so-called backpacker tax invalid.
The court said the tax was a form of “discrimination based on nationality”, which contravened several international treaties Australia had signed.
The eight countries named in the case were the United Kingdom, the United States, Germany, Finland, Chile, Japan, Norway, and Turkey.
The tax on working holidaymakers, introduced in 2017, meant any foreigner on 417 or 462 visas who earned under $18,200 needed to pay 15% tax, unlike Australians working alongside them who were not taxed on similar earnings.
The tax was so daunting, many holidaymakers decided to go to other countries instead, where they were treated more fairly. This hit agriculture, which relies on seasonal workers such as backpackers.
The backpacker tax has annoyed the industry for years. In 2016, Australia’s Federal Government backed down on earlier backpacker tax proposals, dumping a plan to impose a 32.5% tax on backpacker workers and instead slashing the rate to 19% – but hiking airport departure tax by AUD 5, or 9% at the same time.
The tourism and agricultural industries have been agitating ever since to have the foolish backpacker tax axed altogether. Now it seems they have succeeded.
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