australian national institute of management and commerce
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Australian National Institute of Management and Commerce
TLAW603 Taxation Law & Practice
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COMMISSIONER OF TAXATION V PIKE [2020] FCAFC 158. 1
KEY FACTS
The taxpayer, Mr Pike, was born in the Republic of Zimbabwe in 1972. While in Zimbabwe, Mr Pike
developed a career in the tobacco industry and entered into a de facto relationship with Ms
Thornicroft. They had two sons, each born in Zimbabwe.
Ms Thornicroft accepted employment in Australia. Mr Pike, Ms Thornicroft and their sons arrived in
Australia in March 2005. Mr Pike returned to Zimbabwe to complete his employment contract and
to deal with their assets, retaining their house in Zimbabwe. He returned to Australia in September
2005.
Between 2005 and 2014, Mr Pike and Ms Thornicroft jointly rented a succession of three homes in
Australia. They jointly purchased furniture and household appliances. They also jointly purchased
motor vehicles for their use in Australia.
Mr Pike was unable to obtain employment in Australia and in March 2006 became aware of work in
Thailand. He travelled to Thailand that month and accepted a position.
Mr Pike worked in Thailand for the following eight years. He returned to his family in Australia each
year but spent most of his time working and living in Thailand. Mr Pike always returned to the home
in Australia where Ms Thornicroft and their sons were. They discussed moving the family to
Thailand, but Ms Thornicroft did not agree.
Between 2006 and 2014, Mr Pike occupied rented properties in Thailand. He regarded them as his
homes in Thailand. While in Thailand, Mr Pike joined and actively patronised golf, rugby and cricket
clubs, and formed enduring friendships.
Mr Pike, Ms Thornicroft and their sons were granted permanent residency in Australia on 16
February 2009. In August 2010 Ms Thornicroft and their sons were granted Australian citizenship. Mr
Pike made enquiries about obtaining Australian citizenship.
In September 2010, Mr Pike and Ms Thornicroft purchased vacant land in Australia and sold their
house in Zimbabwe. Their intention was to build a family home and provide something tangible in
Australia for their sons. Ultimately, they sold the land undeveloped in 2013.
Mr Pike's April 2013 application for Australian citizenship was refused. He made another application
in October 2013 which was successful, and he became an Australian citizen in 2014.
In 2014, Mr Pike relocated to Tanzania for employment purposes. He lived in fully-furnished rented
accommodation and joined golf and tennis clubs there. In early 2016, Mr Pike accepted a position in
Dubai in the United Arab Emirates.
1
Electronically available from Commissioner of Taxation v Pike [2020] FCAFC 158 (22 September
2020) (austlii.edu.au)
, ISSUES DECIDED BY THE COURT
The taxpayer (i.e. Mr Pike) and the Commissioner of Taxation argued about whether or not Mr Pike
was an Australian tax resident under the ITAA97/ITAA36 for the period 30 June 2009 to 30 June
2016. This was an important issue because the outcome would determine whether or not Mr Pike
had an Australian tax liability on the income he earned during that period of time. The
Commissioner and Mr Pike also argued about whether the tiebreaker test in the Australian/Thailand
DTA applied for the years ended 30 June 2009 to 30 June 2014.
THE DECISION AT FIRST INSTANCE
At first-instance, Justice Logan held that Mr Pike was a resident of Australia under the ordinary
concepts test for the income years ended 30 June 2009 to 30 June 2016, and that Mr Pike was a
resident under the domicile test from April 2014. Regarding the application of the DTA, Justice
Logan held that Mr Pike:
- had no permanent home in Australia or Thailand
- had a habitual abode in both; and
- his closer personal and economic relations were with Thailand, with the result that Mr Pike
was a resident solely of Thailand for the purposes of the DTA.
The Commissioner did not agree with the decision of Justice Logan, that is, that Mr Pike was solely a
resident of Thailand and that his closer personal and economic relations were with Thailand. The
Commissioner also disagreed with Justice Logan’s finding that Mr Pike was not a resident of Australia
under the domicile test before April 2014.
Mr Pike cross-appealed the findings that he was a resident according to ordinary concepts and that
he satisfied the domicile test from April 2014. Mr Pike argued that Justice Logan made an error in
finding that he had a habitual abode in both Australia and Thailand.
The matter went to the Full Federal Court on appeal and both the appeal and cross-appeal were
dismissed.
THE DECISION ON APPEAL
ORDINARY CONCEPTS TEST
On appeal, Justices Davies, White and Steward agreed with the reasoning and conclusions of Justice
Logan regarding the ordinary concepts test.
Justice Logan placed significance on the finding that when Mr Pike returned to Australia, he returned
not as a visitor but to resume residing in Australia as a husband (de facto) and father who resumed
living at the family home.
DOMICILE TEST
Justice Logan found that from April 2014, Mr Pike satisfied the 'domicile' test of residency in
subparagraph (a)(i) of the definition of 'resident or resident of Australia' in subsection 6(1) of the
ITAA 1936. Justice Logan had found that Mr Pike did not obtain an Australian domicile until then,
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