Irish tax adviser wins landmark legal challenge to Australia’s ‘backpacker tax’

Ruling could, in time, result in tax rebates for thousands of Irish travellers

Irish tax advisory group Taxback. com and British woman Catherine Addy have won their long-running legal challenge to Australia's so-called "backpacker tax".

Though Irish backpackers will not benefit for now, the decision could mean that, in time, the Australian Taxation Office will have to pay back taxes collected from thousands of Irish travellers who worked in Australia over the past four years. There are estimated to be up to 75,000 Irish nationals on working holiday visas in Australia in any given year.

Australia's High Court ruled on Wednesday that the 2017 levy discriminated against foreigners on working holiday visas and therefore cannot be imposed on citizens of eight countries with whom Australia has signed tax treaties.

The backpacker tax removed the tax-free threshold of $18,200 Australian dollars (€11,672) from backpackers who were in Australia on either a 417 or a 462 Working Holiday Visa.


The tax-free threshold was replaced by a 15 per cent tax rate on all income earned up to $37,000 Australian dollars, resulting in backpackers being charged higher tax rates than Australian residents. Its application affected the tens of thousands of working holiday-makers that flock to Australia every year.

Ms Addy and Taxback jointly took a case against the tax.

Their lawyers successfully argued these "backpacker tax" rules contravened a "double taxation" agreement Australia has with the the UK, the US, Germany, Finland, Chile, Japan, Norway and Turkey – as it violated double taxation agreements Australia has with these specific countries.

ill-thought-out changes’

In a judgment handed down on Wednesday, 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.

“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,” it said. “She did the same kind of work and earned the same amount of income from the same source; yet an Australian national was required... to pay less tax,” it said. welcomed the High Court decision and the court’s ruling on what they say were discriminatory and ill-thought-out changes.

“While the judgment itself does not yet apply to Irish backpackers, the tax experts predict that this final legal judgement is likely to set a precedent going forward, as it is highly unusual for a country to have different tax regimes for countries from similar territories,” it said.

Backpackers hit by the charge over the past four years could be in line for rebate of up to $2,730 Australian dollars for each year worked.

Spokeswoman Joanna Murphy spoke of the potential impact the ruling could have on Irish travellers:

“Today’s judgement comes after four years of hard work behind the scenes between and our legal counsel and we are glad to be able to finally draw a line under the court proceedings,” she said.

“However, we will continue to lobby for the judgement to be applied across the board, and we are confident that today’s outcome will positively impact Irish backpackers in the near future, based on the fact that tax treatment of backpackers is usually common regardless of which country they come from,” she said.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times