Category Archives: backpackers

Backpacker tax under challenge in Federal Court

by ABC national rural reporter Brett Worthington

The validity of the Federal Government’s backpacker tax is under fire, a year on from the legislation passing the parliament.

It’s almost exactly a year since the Coalition struck a deal with the Greens to impose a 15 per cent tax rate on working holiday makers.

But proceedings initiated in the Queensland Federal Court today claim the backpacker tax breaches international treaties and discriminates against foreign workers.

The backpacker tax taxes all working holiday maker earnings at 15 per cent. Previously, they were eligible to earn up to $18,200 tax free.

The 15 per cent income tax imposed on backpackers by the Federal Government is being challenged in the Federal Court

Irish-based Taxback.com has initiated the legal action on behalf of workers from the United Kingdom, United States and Germany.

“There is a breach with double taxation agreements,” Taxback.com’s Eileen Devereaux told the ABC.

“There’s an audience that arguably don’t have a voice on the ground.”

The legal action claims the backpacker tax is in breach with treaties Australia has with the UK, US, Germany, Finland, Chile, Japan, Norway and Turkey.

Ms Devereaux said workers from these countries represent 50 per cent of people who travel to Australia on 417 and 462 working holiday visas.

A spokesman for Treasurer Scott Morrison said he could not comment on the matter because it was now before the court.

The news has come as a surprise to federal politicians and agricultural lobby groups.

All had assumed the debate was over and industries had adopted the new tax rates.

Prior to last year’s deal with the Greens, the backpack tax debate raged for 18 months, with the agricultural and tourism sectors claiming the uncertainty was harming their industries.

Ms Deveraux said international lawyers wrote to the government to flag their legal action in September.

She said the government responded to that letter and she hoped further negotiations would ensue.

Ms Devereaux said she hoped the government would seek to reinstate previous working holiday maker legislation to prevent the legal action from needing to proceed.

She said the backpacker tax risked giving Australia a poor international reputation.

“These individuals are de facto ambassadors for Australia,” Ms Devereaux said.

“They ultimately fuel the tourism industry and sector into the future when they bring back their various experiences of Australia locally.”

 

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