ATO appeals against backpacker tax case


The ATO has appealed to the Full Federal Court against the Federal Court decision in Addy v FC of T 2019 ATC ¶20-719 ; [2019] FCA 1768.

This decision relates to whether a working holiday maker was required to pay tax at the minimum of 15% applying to the working holiday maker income or at the rates that otherwise apply more generally to Australian residents (which incorporate the tax-free threshold).

The ATO will continue to administer the working holiday maker income tax rates in line with the current practice until the appeals process is exhausted.

Employer obligations have not changed, and employers should apply the PAYG withholding tax rate in accordance with their employees Tax File Number declaration.

If a worker identifies themselves as an Australian resident for tax purposes and ATO records indicate they are a working holiday maker, the ATO will notify both the employer and the worker of their working holiday maker status and advise them to apply the relevant tax rate. The impact of the decision and any appeal is limited to working holiday makers from Chile, Finland, Germany, Japan, Norway, Turkey and the United Kingdom, who also qualify as residents of Australia for tax purposes.

The ATO has encouraged working holiday makers who may potentially be entitled to a refund to wait until the appeal has been decided before seeking a refund, amending their return or objecting.

They should check the ATO website for updates on the appeal decision. Working holiday makers will not be disadvantaged in such circumstances as they will have the opportunity to lodge an amendment request with the Commissioner at a later time.

​The Commissioner will give favourable consideration to any requests to extend the time for lodging objections if a taxpayer’s amendment period has expired.

​Source: ATO media statement, 26 November 2019.

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