Fruit Growers Victoria grower services manager Michael Crisera said the tax shouldn't apply to permanent residents, depending on what visa they're on.
“They shouldn't have to pay higher tax but it all depends on how much they earn,” he said.The ruling is yet to be confirmed by the Commissioner of the Australian Taxation Office, who can appeal the decision before policies are changed.
A statement from the ATO said it was still considering whether an appeal was appropriate.
The ATO said many working holiday-makers weren't tax residents due to varied lengths of stay.
“If the ATO does not appeal, any affected taxpayer who may be entitled to a refund can object to their assessments to have their tax residency considered,” it said.
International tax company Taxback launched the legal action in January 2017 on behalf of British citizen Catherine Addy.
The 27-year-old drama student was in Australia on a 417 visa in August 2015 until May 2017.
Under the non-discrimination article, she was entitled to be taxed under the ordinary resident tax rates, instead of at the 15 per cent rate that applies to working holiday-makers.
The rule applied to working holiday-makers from eight countries: the United Kingdom, the United States, Germany, Finland, Chile, Japan, Norway and Turkey.
Backpackers from these countries made up about 36 per cent of people with working holiday-makers visas in 2018.
Mr Crisera said the backpacker tax discouraged working holiday-makers, and said their numbers dropped by about 20 per cent as a result of the higher tax.
“We want as many options as we can and the bigger the pool of labour the better.
“They need to look at how difficult it is for farmers and consider that when making changes to tax.”
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