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Important Truths about the Backpacker Tax in Australia

Many countries in the world are governed democratically. Democracie are governed by one man one vote rule. The leaders who are voted for become people’s representatives. The people’s representatives run governments on behalf of the populous. The government relies on the taxes of its citizen to be able to operate. The government uses taxes to pay salaries, build roads, hospitals, and public schools. This is background info as to the need to collect taxes.

What is not known to many is that many foreigners who visit various countries around the world are also sometimes subject to tax. The reasoning behind this tax charge is that will the aliens were living in this foreign land, they work and earn a living. In addition, they utilize the same public facilities that the citizens of the said countries use. This is the reasoning that encouraged the Australian government to introduce the backpacker tax back in the year 2017. The backpacker tax was a tax that was charged on foreigners who were in Australia on a visiting visa known as 457 Visa. The foreigners were expected to file for non-residents tax with the revenue authority.

Like any other individual tax charged across the globe, the backpacker tax was charged at a graduated scale rate. The backpackers tax compels the foreign worker to pay tax for every dollar earned beginning at fifteen percent for the first thirty seven thousands. This means that earnings above thirty seven thousand dollars are charged higher rates. This tax is seen to exploit foreigners because they are charged taxes right from the first dollar while the locals are charged at amounts above eighteen thousand and two hundred dollars. The subsequent brackets also show inconsistencies for the backpackers and local income tax. Recently, an Australian Federal Court ruled that this was an illegal levy against the foreign holiday workers.

In its ruling the federal court pointed out that the Australian government has got treaties with seven European countries for their citizen’s not to be subjected to further taxation while working abroad. In the ruling the court also sited discrimination against the foreign workers. The Australian tax man is considering appealing against this decision since they had targeted to collect over half a billion Australian dollars from the backpacker tax.

Other than the court, many sectors such as tourism and farmers who relied on this foreign laborer to bridge the labor shortfall in the country also suffered a heavy blow. The foreigners who worked in Australian in the periods of 2017 to 2019 are questioning the possibility of applying for a refund of the tax formerly submitted to the revenue authority.

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