When supporting a family isn’t taxing enough…

Home is where the heart lies

In what is a familiar pattern to many, one spouse will leave Australia to pursue engaging and financially rewarding career opportunities not available domestically, while the other stays at home in Australia tending to children.

These arrangements may minimise disruptions to schooling and family life, but they can mean that foreign earnings are liable to tax in Australia.

Residency – Continuity of Association

Pike[1] is the latest decision in a class of individual residency cases where an individual lives and works overseas indefinitely but maintains a dependant family in a residence in Australia.

In 2005, Mr Pike and, his de-facto partner, Ms Thornicroft, moved their sons to Australia from Zimbabwe. His Partner and their children settled in Australia and gained Australian Citizenship in 2010. Mr Pike secured his Citizenship in 2014.

Upon leaving Zimbabwe, Mr Pike was unable to secure comparable employment in Australia as a tobacco leaf specialist but in 2006 found employment in Thailand where he lived and worked until 2014. In 2015, Mr Pike was promoted to a role in Tanzania and again in 2016 to a role in the UAE.

Mr Pike visited his family in Australia a minimum of 4 times a year, and although never stayed for more than one half an income year, he was present in Australia for significant periods of time in each of the years.[2]

When returning to Australia, Mr Pike would join his family in one of a succession of family dwellings maintained jointly by he and Ms Thornicroft in Brisbane. These were funded substantially through Mr Pike’s earnings, particularly after 2010 when Ms Thornicroft ceased professional employment due to injury.

It was clear that Mr Pike was devoted to his family[3] and not only provided for his immediate family in Australia, but also family who remained in Zimbabwe and later settled his mother in Australia in the family home.[4]  

On 15 June 2017, the Commissioner assessed Mr Pike for the 2009 – 2016 income years for a primary tax liability of $380,764.55[5] on the basis that he considered him a resident[6] and was liable to Australian tax on foreign earnings.

While the Full Court’s dismissal of the Commissioner’s appeal[7] meant that Mr Pike ultimately did not have to pay Australian tax on wages earned in Thailand, this outcome was only reached after a close-run application of the residency tie breaker provisions in the Australia-Thailand Double Taxation Agreement,[8] (‘Thai DTA’), encompassing a finely balanced assessment of where his closer social and economic relations lay.[9]

Mr Pike was consistently held to be a resident under domestic law[10] in each of the years in dispute.[11] Consequently when he left Thailand in 2014 and lost the protection of a double taxation agreement, his foreign earnings were liable to Australian Tax as neither Tanzania nor the UAE have a Double Taxation Agreement with Australia.

How can I continue to be a resident if I live and work overseas?

Physical presence in Australia and the intention to treat Australia as home are two concepts that effectively explain residency under ordinary concepts, the first test of residency under Australia’s domestic tax laws.[12]

While physically relocating from Australia, other than temporarily, is significant, those leaving families in Australia are not always considered to have severed their presence in Australia:

“The test is whether the person has retained a continuity of association with the place… together with an intention to return to that place and an attitude that that place remains “home”.[13]

The presence of an individual’s home and family in that home in Australia is significant, as evidence of a substantial continuing association with Australia and an intention to return to, and continue to treat Australia as home.

Recent cases on residency, including Pike’s, have reiterated exactly this point:

“…save in the most exceptional circumstances, the existence of a house in Australia maintained by a taxpayer who is working overseas, and the maintenance of a family in that house, has great significance in determining the taxpayer’s residency in that it demonstrates a continuity of association with Australia and an intention to treat that place as “home”.[14]

As always, however, the overall factual circumstances are what matter and the cases below provide an excellent illustration of specific factual aspects that lead to different outcomes. 

Where an individual has been found not to be a resident under ordinary concepts

The 2014 AAT case of the Engineering Manager[15] is an example of an individual supporting a family in Australia found not to be a resident. Mr M was an experienced engineer in the Oil and Gas industry who worked overseas indefinitely while supporting family in a residence in Australia.

The Tribunal determined that marital estrangement[16] between Mr and Mrs M lessoned the overall importance of Mr M’s family ties to Australia when weighed against significant professional ties to Oman.[17]  This had the effect of negating an intention of Mr M to treat the family residence in Australia as his home.[18]

Evidence was accepted for instance that while Mr M did travel back to the Family home, it was ostensibly to spend time with his Children and while staying there, he would sleep in the spare room, despite the continuing public presentation of Mr and Mrs M as a couple.[19]

Although Harding[20] (also a case where an overseas spouse supported a family in Australia) was determined on the existence of a permanent place of abode outside Australia,[21] it was accepted that at the time Mr Harding left for overseas, he did so without the intention of returning to reside at the family home in future and did not intend to take up employment in the locality of that family home again.[22]

Mr Pike – a devoted family man

By contrast, Mr Pike’s evidence was unhelpful in supporting his contention of not having an intention of continuing to treat Australia as his home. The following exchange was included in the Full Court’s reasons at 14,[23] and is illustrative of the reality of many who find themselves in similar circumstances:

[Counsel for the Commissioner]: I am suggesting also that after you went to Thailand you always maintained that you had a home here with your family?

Mr Pike: I always maintained I had a connection with my family.

[Counsel for the Commissioner]: You always maintained that you had a home here with your family?

Mr Pike: My family’s home is my home, Sir. So yes, that would be the case.

Documents submitted in support of Mr Pike’s Citizenship application in 2013 were significant as to Mr Pike’s intention. Applications of this nature can require an applicant to demonstrate a strong association with Australia or an intention to settle in Australia.

Under cross examination, Mr Pike conceded opposing Counsel’s point that this material ‘very much’[24] represented Australia as his intended home and sat inconsistently with his contentions to the contrary in proceedings to determine his tax residency.

As we noted at the outset, Mr Pike was fortunate. Despite being held to be a resident under ordinary concepts by the Commissioner, the Federal and Full Federal Court,[25] he was deemed to be a resident solely of Thailand under the residency tie breaker provisions contained in Article 4 of the Thai DTA for the income years 2009-2014.[26] 

Once Mr Pike left Thailand and moved to Tanzania and later the UAE, he lost the protection of the Thai DTA and was assessed as a resident of Australia in the 2015 and 2016 income years. For these years at least – Mr Pike was a man with responsibilities to many – including his Country of Employment, his Australian family, his Zimbabwean family and the Australian Government.

If you or your family is considering a move overseas, think carefully about your circumstances and how they may attract the attention of Australia’s tax laws.  


This article does not consider individual circumstances and is not advice.

If you do require further information or advice in relation to your residency, we would be delighted to hear from you – Contact Us


May 2021: Proposed Changes to Individual Residency Rules 

Significant changes to the definition of resident for tax purposes were announced in the Commonwealth Government’s 2021-2022 Budget.  These proposed changes, if enacted, are likely to have to effect of substantially altering the operation of current residency rules as they are discussed in this article. For further information on how these changes may affect you, please contact us.  


[1] Commissioner of Taxation v Pike [2020] FCAFC 158 (‘Pike Appeal’).

[2] Pike v Commissioner of Taxation [2019] FCA 2185 [41]-[42] (‘Pike’).

[3] Pike Appeal (n 1) [35a].

[4] Pike (n 2) [15]-[17].

[5] Pike (n 2) [45]-[46].

[6] s6(1) Income Tax Assessment Act 1936 (Cth) (‘ITAA1936’).

[7] Pike Appeal (n 1) [42].

[8] Agreement between Australia and the Kingdom of Thailand for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed 31 August 1989, [1989] ATS 36 (entered into force 27 December 1989), Article 4 (‘Thai DTA’).

[9] Pike (n 2) [101]-[104]; Pike Appeal (n 1) [39].

[10] ITAA1936 (n 6) s6(1).

[11] Pike (n 2) [60], [67]; Pike Appeal (n 1) [17].

[12] ITAA1936 (n 6) s6(1).

[13] Hafza v Director-General of Social Security [1985] FCA 164 [14]; Commissioner of Taxation v Addy [2020] FCAFC 135 [74]-[77].

[14] Pike Appeal (n 1) [16] citing Harding v Commissioner of Taxation [2019] FCAFC 29 [24]; Harding v Federal Commissioner of Taxation [2018] FCA 837 [50].

[15] The Engineering Manager v Commissioner of Taxation [2014] AATA 969 (‘Engineering Manager’).

[16] Engineering Manager (n 15) [56].

[17] Engineering Manager (n 15) [55].

[18] Engineering Manager (n 15) [57].

[19] Engineering Manager (n 15) [45]-[46].

[20] Harding v Federal Commissioner of Taxation [2018] FCA 837 [15]-[17] (‘Harding’).

[21] Harding v Federal Commissioner of Taxation [2019] FCAFC 29 [41]- [53].

[22] Harding (n 20) [17].

[23] Pike Appeal (n 1) [14 (a)].

[24] Pike Appeal (n 1) [14 (b)].

[25] Pike Appeal (n 1) [17]; Pike (n 2) [60], [67].

[26] Pike Appeal (n 1) [39]; Pike (n 2) [104].

This article was originally published on 27 November 2020 and was updated on 19 March 2021.