In what is great news for working holiday maker visa holders from the UK – and some other countries that have a Tax Treaty with Australia containing a no discrimination clause – a lady by the name of Catherine Addy has argued successfully that she was unfairly taxed on pay she earned while working as a waitress in Sydney in 2017.
Ms Addy argued that the tax on working holiday makers had discriminated against her on the basis of her nationality.
Subclass 417 working holiday visa holders have been required to pay tax at 15% on their first $ of taxable income until taxable income reaches A$45,000. (2021/22 tax rates)
From that level of income upwards the usual Australian resident rates of tax apply.
Australian resident individuals can access a tax free threshold of A$18,200 each tax year and pay tax at 19% from A$18,201 of taxable income to A$45,000. (2021/22 tax rates)
The tax savings resulting from the Addy ruling today – and the tax repayments that are now available to working holiday visa holders from the UK (and certain other countries) – will depend on the Australian tax residency status of each individual.
In today’s judgement the High Court of Australia said: “The question is whether that more burdensome taxation was imposed on Ms Addy owing to her nationality. The short answer is yes.”
“When the position of Ms Addy is compared with that of an Australian national, as it must be, that is the only conclusion which may be drawn.”
“Ms Addy’s circumstances in the 2017 income year, including that of her residency in Australia for taxation purposes, were relevantly the same as an Australian national.
The Australian Taxation Office (ATO) had argued there was no discrimination based on nationality.
It should be noted that Ms Addy was a tax resident of Australia – not all working holiday visa holders are.
Examples on the ATO website look at different situations where a working holiday visa holder is and isn’t considered to be a tax resident of Australia.