Australian Immigration Daily News

Following recent media commentary, the ATO would like to clarify the likely impact of the recent court decision in Addy v Commissioner of Taxation.

This decision relates to whether an individual that entered Australia as a working holiday maker was a resident of Australia for tax purposes and whether that individual paid tax at the 15 per cent tax rate applying to working holiday maker income or at the rates applying to residents (which incorporate the tax-free threshold).

It is important to note that the ATO is still considering this decision and has not yet decided whether an appeal is appropriate. The Court found that, considering the individual facts of the case, the working holiday maker in question was a resident for tax purposes and that the non-discrimination article in the relevant treaty meant that the taxpayer was entitled to be taxed under the ordinary resident tax rates instead of at the 15 per cent rate that currently applies to working holiday makers.

This decision only applies to working holiday makers from Chile, Finland, Germany, Japan, Norway, Turkey and the United Kingdom. Around 36 per cent of the total number of people issued with Working Holiday Maker visas in 2018 were from those countries. The decision further only affects those that are a resident of Australia for tax purposes.

Source: Statement-from-the-ATO-on-Addy-v-Commissioner-of-Taxation.pdf