Bywater Investments – Full Federal Court of Australia finds that companies whose directors in offshore meetings “exercised no independent judgment in the discharge of their offices” were resident in Australia

The Full Australian Federal Court accepted the findings of the primary judge below that company directors, who met outside Australia, “exercised no independent judgment in the discharge of their offices but instead merely carried into effect [an Australian accountant’s] wishes in a mechanical fashion,” so that the companies were resident in Australia.

Given that the tests of residence for corporations and trusts are now aligned in Canada, the courts in Fundy Settlement and Boettger would have reached the same conclusion. The case illustrates that someone with real authority should attend the directors’ (or trustees’) meetings in the targeted jurisdiction.

Neal Armstrong. Summary of Bywater Investments Ltd. v. Commissioner of Taxation, [2015] FCAFC 176, aff’g sub nom. Hua Wang Bank Berhad v. Commissioner of Taxation [2014] FCA 1392 under s. 2(1).