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‘Backpacker tax’ overturned by Federal Court

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 landmark ruling said the tax was a “form of discrimination based on nationality” and could not be applied to a British woman living in Australia on a working holiday visa because it was in contravention of a non-discrimination clause in a double taxation treaty between the UK and Australia.

Similar treaties exist between Australia the United States, Germany, Finland, Chile, Japan, Norway, and Turkey.

The tax on working holiday-makers has meant that, to date, any foreigner on 417 or 462 visas earning less than $18,200 has had to pay 15 per cent tax, unlike Australians who are not taxed on similar earnings.

Each year about 150,000 foreigners come to Australia on working holiday visas, meaning the case could potentially impact upon half of those who worked here between the 2017 and 2019 financial years.

But the ATO told ABC News the number could be smaller since the case would only impact upon those on working holiday visas who were considered ‘residents’ of Australia.

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