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Muddled tax residency rules “embarrassing”

Taxation
Backpackers holding a map
Partner Clint Harding is quoted in today’s AFR in response to a Federal Court ruling on the controversial “backpacker tax”, commenting that the case further exemplifies a “complicated web of concepts covering tax residents, temporary residents and working holidaymakers”.

The ruling by Justice John Logan now means that the tax cannot be applied to working holidaymakers from countries including the US, UK, Germany, Finland, Japan, Norway, Turkey and Chile, because it contravenes non-discrimination clauses contained in tax treaties Australia has signed.

“In my view, uncertainty prevails and should be addressed,” Clint said. “It is getting to the point where it is becoming embarrassing for all of those involved in advising on, and indeed administering, issues concerning tax residency.”

“It is getting to the point where it is becoming embarrassing for all of those involved in advising on, and indeed administering, issues concerning tax residency.”

Clint Harding, Partner

Clint said some backpackers could be entitled to refunds from the Australian Taxation Office, provided they were citizens of countries with which Australia had signed tax treaties containing a non-discrimination clause, and whose circumstances are such that they are considered tax residents of Australia.

 

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