Last month, the Federal Court struck down the Coalition’s controversial ‘backpacker tax’, introduced in 2016, ruling that it is unlawful to charge non-residents higher taxes than Australian residents.
Now, the ATO has appealed the case:
The tax on working holiday makers meant foreign travellers on 417 or 462 visas, who earned less than $18,200, were required to pay 15 per cent tax, unlike Australians who were not taxed on similar earnings…
Announcing its appeal in a statement today, the ATO said employers should continue to administer the 15 per cent tax.
“Employer obligations have not changed and employers should apply the PAYG withholding tax rate in accordance with their employees’ Tax File Number declaration,” it said.
“Working holiday makers who may potentially be entitled to a refund are encouraged to wait until the appeal has been decided before seeking a refund, amending their return or objecting”.
The ATO previously told the ABC it expected, “around 5 per cent of working holiday makers are likely to be entitled to have their return amended” if the ATO’s appeal was unsuccessful.
The appeal comes as many Australian farmers are employing backpackers to harvest summer crops.
Victorian Farmers’ Federation vice-president Emma Germano said her industry would “wait with bated-breath” for the results of the appeal…
“Growers are sick and tired of the convoluted system that we have to navigate, we look forward to some common sense prevailing”.
No changes will be made to the tax until the appeals process has concluded.
While the ruling against the backpacker tax makes sense logically, it will likely increase the numbers of foreigners working on farms and in hospitality, where wage theft is endemic. Thus, it will put more downward pressure on wages.
