High Court picks errors with controversial backpacker tax

It has already been seen as an important win for farmers wanting to tap back into this key workforce once international pandemic travel restrictions ease.

The court ruling says the tax contravened non-discrimination clauses built into tax treaties signed by Australia with the UK, the US, Germany, Finland, Chile, Japan, Norway and Turkey.

Legal action to reverse the tax was initiated in 2018 by international tax accounting and advisory firm Taxback.com on behalf of working holidaymakers from eight countries.

The four-year legal battle centred on lead claimant British citizen Catherine Addy, who argued she was discriminated against in having to pay the Backpacker Tax while on a working holiday in Australia in 2017.

The unanimous ruling found the tax breached Australian obligations under the tax treaties agreed with those eight countries.

MORE READING: WTO to probe Chinese duties on Aussie wine.

The tax introduced in 2017 levied 15 per cent on the earnings of foreign nationals up to $37,000.

Many saw the tax as a disincentive to working holidaymakers to take up much-needed seasonal picking work while visiting Australia.

Taxback.com CEO, Joanna Murphy, welcomed the High Court decision, saying it brought final clarity to the situation facing thousands of foreign workers filing tax returns for the years since the Backpacker Tax was introduced.

"The Court has reaffirmed important protections for foreign citizens choosing to work while holidaying in Australia," Ms Murphy said.

"It was always clear to us when this tax was introduced in 2016, against the wishes of the agricultural sector, that it breached a number of international tax agreements. It also damaged Australia's reputation as a working holiday destination," she said.

"Ending the Backpacker Tax also removes a key barrier to rural and regional industries securing the workers they so badly need as Australia emerges from the COVID-19 period."

Austrade estimates the overall contribution by working holidaymakers to the Australian economy is $3.1bn1 per year. They were estimated to have spent $920m in regional towns alone in 2017, the year the tax was introduced.

Start the day with all the big news in agriculture! Sign up below to receive our daily Farmonline newsletter.