Pike – Federal Court of Australia, Full Court finds that an individual had his centre of vital interest where he was employed, rather than where he had his greater personal ties

Unusually, the tiebreaker rule for individuals in the Australia-Thailand Treaty applied the test of the country of the individual’s habitual abode second, and the country “with which the person’s personal and economic relations are the closer” third, rather than in the reverse order. An individual (Mr Pike) and his family emigrated from Zimbabwe to Australia where his wife could find work but not he (given his specialty). He instead obtained employment in Thailand, from which he supported his family, and visited them in Australia four to six times a year (amounting to 32 to 155 days annually), over the nine taxation years in question.

The Court confirmed the primary judge’s conclusion that Mr Pike had a habitual abode in both countries, stating inter alia that “there is no warrant … for imputing that the habitual abode of a person is the place where the individual has spent more days.” Turning to the “personal and economic relations” test, the primary judge considered Mr Pike’s personal relations to be closer to Australia than Thailand (where he nonetheless had a range of personal relations), but found:

In contrast and overwhelmingly, Mr Pike’s economic relations were closer to Thailand.

The Court found that there was no reviewable error in finding that, by virtue of this test, Mr Pike was a Treaty resident of Thailand.

Neal Armstrong. Summary of Commissioner of Taxation v Pike [2020] FCAFC 158 under Treaties – Income Tax Conventions – Art. 4.