There is more chaos within the Morrison Government today with the Federal Court of Australia ruling Scott Morrison’s backpacker tax cannot be applied to workers from some countries that have a tax treaty with Australia.
The backpacker tax was always an ill-conceived and rushed Government revenue grab – by then Treasurer, Scott Morrison – but sadly, it was broadly supported by the farm sector and National Party MPs.
It has now been knocked down by an Australian court on the basis that it contravenes provisions of the Double Tax Agreements between Australia and other countries, which disallows discriminatory taxation between residents of the signatory countries.
Justice Logan said, “That is a disguised form of discrimination based on nationality. That is exactly the type of discrimination which is prohibited by Art 25(1) of the Double Taxation Agreement and, per force of s.4 of the Agreements Act, prohibited by that Act.”
The backpacker tax only passed the Parliament in 2016 because of the support of the National Party and a dirty deal with the Greens. There have been many losers including producers and growers.
The timing of the tax was terrible, when farmers were facing huge workforce shortage challenges.
Key industry groups have been calling on the Government to act on labour supply issues for some time with producers and growers including the Victorian Farmers Federation expressing significant and ongoing concern and Nationals MP and Member for Mallee Anne Webster calling the shortage a crisis.
The backpacker tax introduced a 15 per cent income tax rate on workers with earnings under $18,200 who were working under 417 and 462 visas – broadly known as backpacker workers.
The Government introduced the Backpacker Tax without any industry or country-to-country consultation.
Today’s judgement is what you can expect when Governments makes policy on the run.