Working Holiday maker and resident for tax purposes - no tax free threshold

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_MarkyMark

(Initiate)Initiate

18 Feb 2021

Hi all - I have a question for a client of mine.

Facts - which I agree to:

for the 2019/2020 income year, they were:
- a Working Holiday Maker from 1 July 2019 to 1 December 2019;
- an 820 visa holder from 1 December 2019 to 30 June 2020;
- a resident for tax purposes from 1 December 2019.
- Calculated tax free threshold to be $13,464
- Working Holiday income $29k
- Non-working holiday income $47k
- Working Holiday maker from Canada. on a 417 Visa
Working holiday income will be taxed first

Issue:

My client has been denied the tax free threshold because "WHM income is greater than the tax-free threshold of $16,xxx". I have looked over the below legislations and could not find any section excluding tax residents from the tax free thresold notwithstanding their WHM status.

Income Tax Rates Amendment (Working Holiday Maker Reform) Act 2016
Income Tax Rates Act 1986

Now also considering the results from Commissioner of Taxation v Addy - does anyone know if this treatment by the ATO is correct? and whether or not it is worth looking into further?

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