Tax Treaty Case Law around the Globe 2017

S. 13Australia: Puppet Boards – Where is Central Management and Control Exercised and Where is the Place of Effective Management?

Michael Dirkis

1. S. 14Introduction

Just as the 1960 United Kingdom case of Unit Constructions v Bullock “was significant […] because it expressly rejected the notion that a company must always be taken to be resident where its board is resident”, Bywater Investments Ltd & Ors v Commissioner of Taxation is also significant in the Australian context as the first case to endorse that principle in Australian jurisprudence. Whilst the litigation in Bywater Investments focused upon the application of the Australian domestic definition of “resident” in section 6 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936), which uses the concept of “central management and control”, the High Court of Australia made some observations on the construction of the phrase “place of effective management” in the context of the Australia-United Kingdom Income and Capital Tax Treaty (1967), Australia-United Kingdom Income and Capital Tax Treaty (2003) and Australia-Switzerland Income Tax Treaty (1980). It was accepted by Gordon J that the concepts of “central management and control” and ...