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Points to Note about the Australian Backpacker Tax

Many countries in the world are governed democratically. Each citizen who has attained the majority age is eligible to vote in their country. Each leader is a representative of a specified geographical area. The elected leader hence manage the national and local level governments on behalf of the populous. Government operations are funded from the taxes collected by the revenue authority. In turn, the government provides public utilities such as the road infrastructure, public schools and public health facilities to mention but a few. This is background info as to the need to collect taxes.

What is not known to many is that many foreigners who visit various countries around the world are also sometimes subject to tax. The reasoning behind this tax charge is that will the aliens were living in this foreign land, they work and earn a living. In addition, they utilize the same public facilities that the citizens of the said countries use. For this reason, in 2017, the Australian government resolved to introduce the levy termed the backpackers tax. This tax was basically levied on the foreign laborers in Australia. The foreigners were expected to file for non-residents tax with the revenue authority.

Income tax is charged on a graduated scale and so is the backpackers tax levy. The visitors where charged a fifteen percent tax from the first dollar they earned and up to thirty seven thousand dollars. This means that earnings above thirty seven thousand dollars are charged higher rates. This tax seems to be unfair because the foreigners are charged tax for every dollar earned while the locals get an exemption for amounts below eighteen thousand and two hundred. The subsequent brackets also show inconsistencies for the backpackers and local income tax. Recently, an Australian Federal Court ruled that this was an illegal levy against the foreign holiday workers.

In its ruling the federal court pointed out that the Australian government has got treaties with seven European countries for their citizen’s not to be subjected to further taxation while working abroad. In the ruling the court also sited discrimination against the foreign workers. The Australian tax man is considering appealing against this decision since they had targeted to collect over half a billion Australian dollars from the backpacker tax.

Other than the court, many sectors such as tourism and farmers who relied on this foreign laborer to bridge the labor shortfall in the country also suffered a heavy blow. Many of the foreigners who had been paying the backpackers tax since the year 2017, are looking forward to appealing to the revenue authority to give them a refund of monies paid.

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