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Important Facts about Backpacker Tax in Australia

Many countries in the world are governed democratically. Democracie are governed by one man one vote rule. These leaders are people’s representatives hence they speak and act on behalf of the people. 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.

Many individuals do not know that aliens are not always exempted from paying taxes in foreign countries. This is because they earn the income that they are taxed on, in the respective country where the tax is imposed. Furthermore, they benefit from public utilities which have been provided using public funds. On the basis of this school of thought, Australia introduced a backpacker tax in the year 2017. This tax aimed to collect income tax levy from the foreigners who were had gainful employment in the country. The foreigners were expected to file for non-residents tax with the revenue authority.

Income tax is charged on a graduated scale and so is the backpackers tax levy. The backpackers tax compels the foreign worker to pay tax for every dollar earned beginning at fifteen percent for the first thirty seven thousands. Amounts higher than thirty seven thousand are charged at a higher rate of the graduated scale rate. This tax seems to be unfair because the foreigners are charged tax for every dollar earned while the locals get an exemption for amounts below eighteen thousand and two hundred. In addition, there is a great difference between the graduated scale rates of the foreigners and the locals income tax. Recently, an Australian Federal Court ruled that this was an illegal levy against the foreign holiday workers.

The court observed that the foreigners who are being taxed under the backpacker tax levy hail from countries which have treaties with Australia not to practice such unfair tax regimes on respective nation’s citizens. In addition, the court also pointed out that this was discrimination against worker who earned equal pay. 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. Many of the foreigners who had been paying the backpackers tax since the year 2017, are looking forward to appealing to the revenue authority to give them a refund of monies paid.

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