The Australian Taxation Office (ATO) has lost another major case on tax residency and backpacker tax refund. This follows Glenn Harding’s case last month.
Potential for Higher Tax Refunds
Backpackers may now amend their prior tax returns to check if they are eligible for more refunds. The ATO may have made errors in processing past returns.
To see how this ruling impacts backpacker tax refunds, it’s important to understand the case of Catherine Addy.
On October 30, 2019, the Federal Court overruled the ATO’s decision in Andy V Commissioner of Taxation [2019] FCA 1768. The court ruled that Catherine Addy is a tax resident and qualifies for normal tax rates and the tax-free threshold.
Impact of the Decision
The Federal Court upheld that Addy meets the definition of a tax resident. This means she can benefit from the Australian tax resident rate, including a tax-free threshold of up to $18,200.
Catherine arrived in Australia in 2013. For her FY2017 tax return, the ATO ruled she was subject to the Backpacker Tax Refund. This tax imposes 15 cents per dollar, which is earned up to $37,000, with higher rates for non-tax residents. She was required to pay $2,767.95.
ATO’s Changing Decisions
In December 2017, with the help of a tax agent, Catherine objected. The ATO amended her status to a tax resident and refunded her $3,010. However, in February 2018, the ATO overturned this decision, reinstating her as a non-tax resident and applying the Backpacker Tax again.
Frustrated, Catherine and her tax agent took the case to the Federal Court—and won. The court ruled that her intention to reside in Australia, along with her minimal travel, qualified her as a tax resident. She primarily lived in Earlwood.
This ruling affects 75,000 backpackers. The ATO may refund hundreds of millions in taxes. You could be eligible for a refund too.
Find Out If You Qualify
If you filed a FY2017 backpacker tax refund, we can help. Contact us to check if you can amend your tax return and maximize your refund.
📞 Call: 0410-829-900
📧 Email: jc@endurego.com
