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22 Nov 2019 Backpacker tax: Addy v Commissioner of Taxation

MEMBER 327 writes: 

In the recent Addy v Commissioner of Taxation test case, the matter of non-discrimination (Article 25(1) of UK/Aus DTA) arose. In TaxVine 42 (1 November 2019), it was specified that if this matter survives appeal, it would only affect those working holiday makers of countries that include a non-discrimination clause in their DTA with Australia. Dare I say it does affect those from countries without a non-discrimination clause in the DTA? 

If the decision survives appeal, the matter is further reaching, because it discriminates based on nationality, beyond the DTA. If a UK national on a backpacker visa is a tax resident in Australia and can be taxed like an Australian due to the effect of the DTA, but for instance a Dutch national (no non-discrimination clause) cannot, ceteris paribus, the Dutch backpacker will be discriminated against the UK backpacker based on nationality. Why would it be allowable for two persons with like circumstances other than nationality, to be taxed differently? In my humble opinion this constitutes discrimination regardless. 

It appears the Addy v Commissioner of Taxation case could be opening a huge can of worms. 

Editor’s note: You can read a detailed summary of the Addy case in TaxVine 42 (1 November) – “UK DTA puts a hole in the backpacker tax”.


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