The High Court has decided: no discrimination for working holiday makers

By Tony Nunes, Kelly + Partners Chartered Accountants

The High Court of Australia’s decision in Addy’s case in late 2021 is a landmark decision favouring working holiday makers (WHMs) in Australia. This recent decision by the High Court provides assurance to working UK holidays makers (and others) that they will be subject to the same concessional tax rates that Australian nationals enjoy.

Broadly, WHMs who are in Australia for less than 183 days in a tax year are considered foreign tax residents, and subject to tax from the first dollar of income they earn in Australia. Uncertainty existed historically when WHMs spent 183 days or more in Australia as those WHMs were required to determine their Australian tax residency.

In Addy’s case, the Australian tax offce (ATO) assessed Addy, a WHM from the UK, to be an Australian tax resident. The ATO sought to tax Addy based on the special WHM tax rates that are specifically applicable to WHMs. These rates are lower than the tax rates imposed on foreign residents, whilst higher than the effective tax rates imposed on ordinary tax residents.

The High Court ruled that imposing WHM tax rates on Addy contravenes Article 25(1) of the Australia UK Double Tax Agreement (DTA) which prevents Australia from imposing a more burdensome taxation on Addy owing to her UK nationality. The High Court also held that a WHM who is present in Australia for 183 days or more in a tax year would prima facie be a tax resident, unless the ATO determines otherwise.

Hence, WHMs who spend 183 days or more in Australia in a tax year now have more certainty with respect to their tax residency status, and if these WHMs are from UK (or other countries with a similar DTA), they will be subject to the same concessional tax rates that Australian nationals enjoy. However, this means it may be more diffcult for WHMs to obtain foreign tax resident status going forward.


Tony Nunes

Tony Nunes

GGI member firm
Kelly + Partners Chartered Accountants
Advisory, Auditing & Accounting, Corporate Finance, Tax, Fiduciary & Estate Planning
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Kelly + Partners Chartered Accountants is a specialist chartered accounting business that assists private businesses, private clients, and families to manage their business and personal financial affairs. The Kelly + Partners Tax Consulting practice is respected as one of the foremost tax advisory firms in Australia and offers the full range of direct, indirect, and international tax services.

Tony Nunes has over 22 years’ experience in providing tax advice. He has extensive experience in advising clients on issues affecting cross-border transactions, acquisitions, and restructures, and in all aspects of structuring the ownership and financing of corporations and their operations.


Published: Global Mobility Solutions Newsletter, No. 01, Spring 2022 l Photo: picture cells - stock.adobe.com

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