Case News - Commissioners wins Addy Non-Discrimination Case

6 August 2020

A UK citizen in Australia on a working holiday visa has been found not to have been a resident under ordinary concepts, although she was resident under the 183 day test due to a technicality. However, she was not discriminated against by Australia's backpacker Tax. The purpose of the backpacker tax is to levy a flat 15% tax on the income of backpacker (working holiday maker) in Australia.

In a decision by the Full Federal Court handed down on 6 August 2020, the ATO wins his appeal in relation to a previous decision in which a backpacker, Ms Catherine Addy, was found to have been discriminated against.

Because Ms Addy was backpacker from the UK, Article 25 of the Australia UK Double Tax Agreement was found initially to have applied to her case.

This meant that because she was found to be a resident of Australia, that she was entitled to the tax-free threshold that other Australian citizens were entitled to and that she should not be denied that concession under the new Backpacker Tax Rules.

The case is also notable because of the decision of J Logan at first instance in the Federal Court, also found that Ms Addy was a resident of Australia according to ordinary concepts, but the tenuous circumstances of her case had lead many in tax to question whether a foreigner living in a very temporary 'shared' a holiday visa could really be considered resident. The Full Federal Court reject this outright and found that Ms Addy was not a resident under ordinary concepts. She was however a resident under the 183 day rule, due to a technicality of the Commissioner not considering her circumstances.