British woman wins High Court discrimination battle over Australia's 'backpacker tax'

The ruling could have consequences for thousands of other backpackers forced to comply with the scheme.

Catherine Addy worked in Sydney between 2015 and 2017

Catherine Addy worked in Sydney between 2015 and 2017 Source: AAP

A British woman has won a major legal battle over Australia's controversial "backpacker tax", with the High Court finding it in breach of tax treaty clauses with the United Kingdom.

Catherine Addy claimed she'd been discriminated against because of her nationality when she was made to pay tax at a different rate to Australian residents between 2015 and 2017 when she was working in Sydney's hospitality industry.

Under the "backpacker tax", introduced in 2017, 417 visa holders are required to pay a 15 per cent tax to the first $37,000 of their income.

Ms Addy earned $26,576 during her time in Australia.

The tax burden for Australians from the same source was less, with an Australian national entitled to a tax-free threshold for the first $18,200 and then taxed at 19 per cent up to $37,000.
On Wednesday, the High Court found "there was no dispute" Ms Addy was an Australian resident for tax purposes during 2017.

As such, the levy imposed on her that year was in violation of a tax agreement with the UK that ensures nationals shall not be subjected to "other or more burdensome" taxation imposed on Australians "in the same circumstances, in particular with respect to residence".

"An Australian national deriving taxable income from the same source during the same period would have been taxed at a lower rate," the court said in its judgment.

"The more burdensome taxation was imposed on Ms Addy owing to her nationality and, for that reason, contravened ... the United Kingdom convention."

It's thought the ruling could have consequences for other backpackers who had higher taxes levied against them under the scheme.

Ms Addy had earlier appealed a 2020 Federal Court ruling that sided with the Australian Taxation Office and upheld the validity of the tax.

Similar tax treaties exist between Australia and countries such as the United States, Germany, Japan, Norway and Turkey.


Share
2 min read

Published

By Evan Young
Source: SBS News


Share this with family and friends


Get SBS News daily and direct to your Inbox

Sign up now for the latest news from Australia and around the world direct to your inbox.

By subscribing, you agree to SBS’s terms of service and privacy policy including receiving email updates from SBS.

Download our apps
SBS News
SBS Audio
SBS On Demand

Listen to our podcasts
An overview of the day's top stories from SBS News
Interviews and feature reports from SBS News
Your daily ten minute finance and business news wrap with SBS Finance Editor Ricardo Gonçalves.
A daily five minute news wrap for English learners and people with disability
Get the latest with our News podcasts on your favourite podcast apps.

Watch on SBS
SBS World News

SBS World News

Take a global view with Australia's most comprehensive world news service
Watch the latest news videos from Australia and across the world
British woman wins High Court discrimination battle over Australia's 'backpacker tax' | SBS News