Pike Vs Commissioner of Taxation: When Tax Residence depends on economic and personal connections

Updated: Jan 19

The issue of tax residency can be complicated. On December 24th, 2019, a Full Federal Court decision was handed down in the case of Pike v Commissioner of Taxation [2019] FCA 2185. This case illuminates some of these complexities.


Ultimately, when it came to Pike V the Commissioner, the case boiled down to whether the judge believed that Mr Pike’s economic ties or his personal ties created the stronger case for which country he was a tax resident of. In this case the Federal Court overturned the decision made by the Commissioner of Taxation by finding that his economic ties were stronger and ruling that Mr Pike was a non-resident for the 2009 to 2014 financial years.


Summary of the Case


Mr Pike was a dual resident of Australia and Thailand between 2009 and 2014. Since he satisfied the criteria of residency in both countries, his tax residency had to be settled by the tie-breaker provisions within the Australia Thailand Double Tax Agreement (the DTA). While Mr. Pike contended that he was a non-resident during these years, the Commissioner of Taxation issued Amended Notices of Assessment to tax him as an Australian resident.


Logan J found that there was not enough evidence to show that Mr Pike passed the domicile test for either Australia or Thailand. No other test or tie-breaker clearly delineated Mr Pike’s residency either. Ultimately, Logan J weighed up whether Mr Pike’s economic ties, with his employment in Thailand, or his family ties in Australia, held more weight in determining residence. Logan J determined that his ties were closer to Thailand, and that he should accordingly be deemed to be a non-resident during the years in question, up until the point when he became an Australian citizen in 2014.