Recently Australian Taxation Office lost another major case on the tax resident about backpacker tax refund, this follows from Glenn Harding’s Case last month.
The outcome of the case would mean that Backpacker would be able to amend their prior year’s tax return and see whether they can get more tax refunds back, as ATO might made a mistake in the processing of the return.
For the backpacker to understand how the backpacker tax return can get more tax refund, it is important to understand the case around the backpacker tax return of Catherine Abby.
This particular case is Andy V Commissioner of Taxation [2019] FCA 1768. On 30 October 2019, the Federal Court overruled ATO’s decision and formulated the view that Catherine Addy is a tax resident, and subject to the normal tax rate and tax-free threshold.
Federal Court of Australia upheld the view that Addy is a tax resident, and meets the definition of the Tax Resident, as such she can enjoy the Australian Tax Resident tax rate, which is up to $18,200, and there is no tax.
Catherine came to Australia in 2013, and for her FY2017 tax return, ATO ruled that she is subjected to the Backpacker tax, which imposes 15 cents on a dollar for anything up to $37,000. After that, it is subject to a higher tax rate for a non-tax resident. She needs to pay around $2,767.95.
She then objected to the decision with the tax agent’s help, in December 2017, ATO made an amendment and ruled her as a tax resident, and gave her a refund of around $3010. In February 2018, ATO overturned the amendment, saying that they still believe Addy is a non-tax resident, and subject to backpacker tax. Addy got mad, and through the help of her tax agent, they took ATO to the federal court and won the landmark case. The rationale behind the judgment is that Addy intends to reside in
Australia and she did not travel a lot during her stay, she usually stayed in Earlwood.
The decision from the Federal will affect 75,000 backpackers, and ATO is looking at refunding hundreds of millions of tax dollars to those backpackers. You could be the one, to talk to us to find out whether you can amend your prior tax return to maximize tax refund for your prior year tax returns.
If you are a backpacker and have done the FY2017 tax return, please come and talk to us, and we will help you speak with ATO to see whether you are eligible to get a refund from ATO due to the correction. Please give us a call at 0410-829-900, or email us at jc@endurego.com.
