Irish backpackers could in time benefit from a refund following a successful legal challenge taken by Irish company Taxback.com and a British woman against an Australian tax introduced four years ago.
Earlier today, Australia's High Court ruled that the Backpacker Tax cannot be levied on citizens of eight countries that Australia has signed tax treaties with.
These include the UK, US, Germany, Finland, Chile, Japan, Norway and Turkey, but not Ireland.
The tax removed a tax-free threshold of $18,200 from backpackers who were in the country on one of two different types of working holiday visas.
As a result, they were forced to pay 15% on all income they earned up to a ceiling of $37,000.
This meant they were paying a higher rate of tax than residents of Australia.
Over the four-year period in question, 820,000 working holiday visas were issued by Australia to visitors, and 320,000 of those came from the eight countries covered by the treaties.
"Most working holidaymakers will be non-residents as they are in Australia to have a holiday and working to support that holiday," the Australian Tax Agency said in a statement.
"This decision will not change the tax rates for the majority of working holidaymakers."
But Taxback.com thinks it likely that it will in time set a precedent for backpackers who were in the country over the same timeframe from other states, including Ireland.
If this were to be the case Taxback.com estimates that as many as 37,401 Irish backpackers could be in line for a refund of up to €1,600.
"Today’s judgement comes after four years of hard work behind the scenes between Taxback.com & our legal counsel and we are glad to be able to finally draw a line under the court proceedings," said Joanna Murphy, CEO, Taxback.com.
"However, we will continue to lobby for the judgement be applied across the board and we are confident that today’s outcome will positively impact Irish backpackers in the near future, based on the fact that tax treatment of backpackers is usually common regardless of which country they come from."
"The indication is that the Australian Tax Office will now have to consider the position of all working holiday visa holders and amend how the Backpacker tax is applied to all foreign travellers."
Taxback.com took the case jointly alongside British woman Catherine Addy after the new tax was introduced in 2017.
The case first went to a court in Brisbane where Taxback.com and Ms Addy won, before they then lost an appeal to a federal court.
However, they later succeeded in getting special leave for the case to be heard in the High Court.
Today's ruling by the Australia’s top court was unanimous.
"In our view it was very clear when the tax was introduced in 2016 that it discriminated against foreign workers and breached several international tax agreements. It also damaged Australia’s reputation as a working holiday destination," Ms Murphy said.
