Key points:
- British national Catherine Addy claims a tax imposed on her as a backpacker discriminated against her on the basis of her nationality
- Foreign nationals in Australia on 417 visas are subject to a 15 per cent tax on income up to $37,000
- The ATO says there was no discrimination on the basis of nationality, rather the tax was designed to help backpackers avoid the higher rates of tax imposed on other foreign workers
The tax was introduced in 2017, driven by then and now Deputy Prime Minister and Nationals Leader Barnaby Joyce.
It applies to holders of 417 visas, which allow young people between 18 and 31 to travel to Australia for a working holiday.
It imposes a 15 per cent tax on income up to $37,000.
Ms Addy worked as a waitress in two Sydney hotels earning $26,576 between January 2017 and May 2017 when she left Australia.
But she is challenging the decision to tax her under the backpacker tax, instead of as a resident of Australia.
Ms Addy said the tax was at odds with an international "double tax" agreement Australia has with Britain and a number of other nations.
That agreement prohibits discrimination on the basis of nationality, by stating foreign nationals should not be taxed in a more "burdensome" way than locals in a similar position.
Her legal team will tell the High Court that she was taxed at a significantly higher rate than an Australian taxpayer who would be subject to a tax-free threshold of $18,200.
"In a year such as 2018, where the backpacker tax applies to the entire 12 months rather than part of the year, a person like Catherine Addy with a taxable income of $26,576, would pay tax of $3,986," the submissions said.
"An Australian who was also a tax resident of Australia would pay tax of $1,591."