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Important Truths about the Backpacker Tax in Australia

Many countries in the world are governed democratically. Democracie are governed by one man one vote rule. The leaders who are voted for become people’s representatives. The people’s representatives run governments on behalf of the populous. Government operations are funded from the taxes collected by the revenue authority. The government uses taxes to pay salaries, build roads, hospitals, and public schools. This is background info as to the need to collect taxes.

It may come as a surprise to some people but foreigners are also charged taxes in the alien countries that they visit. This is because they earn the income that they are taxed on, in the respective country where the tax is imposed. Furthermore, they benefit from public utilities which have been provided using public funds. 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 revenue authority thus compelled foreign laborers to pay a special category tax for any gainful employment in Australia.

Like any other individual tax charged across the globe, the backpacker tax was charged at a graduated scale rate. The visitors where charged a fifteen percent tax from the first dollar they earned and up to thirty seven thousand dollars. Amounts higher than thirty seven thousand are charged at a higher rate of the graduated scale rate. This means that the foreigners are charged a higher tax rate than the locals who pay no tax for incomes up to eighteen thousand two hundred dollars. Further the next tax bracket charged locals approximately ten percent for earnings between eighteen thousand two hundred dollars to thirty seven thousand dollars. In recent times there is a federal court in Australia that ruled there is an illegality with this type of tax regime.

this is against the spirit of unity among some of the European countries whose citizens are being charged such taxes. In the ruling the court also sited discrimination against the foreign workers. In the meantime, the Australian tax man is contemplating an appeal against this ruling since this was an opportunity to get a tax income of half a billion dollars.

Sectors that relied on the supply of foreign laborers are up in arms at this decision which is causing them to have a shortfall of employees. 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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