The Federal Court of Australia had to decide whether the denial of the zero bracket for a UK citizen was in line with the nationality non-discrimination provision of Art 25 para 1 DTC Australia – United Kingdom 2003. The taxpayer – Mrs. Abby – lived and worked in Australia for two years under a working holiday visa and was a resident of Australia during the relevant taxable year. Persons under a working holiday visa were subject to a special tax regime. They were taxed at a rate of 15 % and did not benefit from the zero bracket. By contrast, the normal tax regime for Australian residents provided for a zero bracket and taxed the income above this threshold at a rate of 32.5 %. Due to the denial of the zero bracket, Mrs. Abby had to pay a higher amount of taxes under the working holiday regime than she would have paid under the normal tax regime. As an Australian national resident in Australia would never be subject to the working holiday regime, the Federal Court of Australia held that denying the zero bracket to a UK national resident in Australia violated Art 25 para 1 DTC Australia – United Kingdom 2003. Alexander Rust reviews the decision and illustrates the consequences for Au...