Following an appeal by the ATO, Taxback.com is delighted to announce that the Australian High Court has today reaffirmed a landmark court ruling from October 2019 which stated that the ‘Backpacker Tax’ cannot be levied on citizens from certain foreign countries.
This ruling is likely to have a significant impact on how backpackers are taxed in Australia in the future.
What is the Backpacker Tax?
Introduced in January 2017, the controversial tax removed the tax-free threshold of $18,200 from Backpackers who were in Australia on a 417 or 462 Working Holiday Visa.
Instead, the tax-free threshold was replaced by a 15% tax rate on all income earned up to $37,000.
A higher tax rate also applied on amounts earned above $37,000.
In short, backpackers were charged higher tax rates than Australian residents.
Following the introduction of the Backpacker Tax, Australia saw a decline in backpacker numbers, causing difficulties for many regional farms and businesses needing seasonal staff.
What does this ruling mean for Backpackers?
If you visited Australia as a working holidaymaker between 2017 – 2020, it’s highly likely that you will be entitled to a significant tax refund as a result of this case!
The average Australian tax refund is $2,600, so it’s definitely worth checking out what you might be due.
Put simply, if you think you have been affected by the Backpacker Tax, you should apply for your Australian tax refund.