BULAW3731 Income Tax Law & Practice

Part A (70 marks)
In accordance with the Australian government’s Budget Paper No. 2 Budget Measures 2015-2016, the Income Tax Rates Amendment (Working Holiday Maker Reform) Act 2017 (the ‘WHMR Act’) was passed. The WHMR Act proposed changes to tax rules for working holiday makers on 417 and 462 visas (‘backpackers’) as a means of raising revenue. This, with other proposed legislative amendments concerning working holiday makers, has been referred to in the media as the ‘Backpacker Tax’.

Choose and read ONE of the following cases.
Clemens and Commissioner of Taxation [2015] AATA 124 (6 March 2015); or
Jaczenko and Commissioner of Taxation [2015] AATA 125 (6 March 2015);or
Koustrup and Commissioner of Taxation [2015] AATA 126 (6 March 2015)

Task
Answer the following questions

1. What issues are being considered in your chosen case, and what decision (conclusion) is reached? (20 marks)
2. Would the decision in your chosen case support the need for a change to the residency rules for backpackers in Australia? Give reasons (20 marks)
3. How does the WHMR Act treat income earned by ‘backpackers’ in Australia? (10 marks)
4. Is this different to the way income earned by ‘backpackers’ was treated prior to the introduction of the WHMR Act? If so, how? (20 marks)

Part B (30 marks)
Consider the judgement delivered on 30 October 2019 by Justice Logan in the Federal Court of Australia decision Addy v Commissioner of Taxation [2019] FCA 1768. (Hint: you may either read the decision or read at least one of the several commentaries available online)

Task
Answer the following questions

1. What are the possible consequences of this decision for ‘backpackers’ who have already paid tax in accordance with WHMR Act? Give reasons.(20 marks)
2. How has the Australian Tax Office (ATO) responded to the decision in Addy v Commissioner of Taxation? (10 marks)