The first-tier tribunal tax chamber, in the matter of Oppenheimer v HMRC [2022] UKFT 00112 considered, in detail, the tiebreaker test in the double tax agreement between South Africa and the UK, and the findings of the court are significant and relevant for South African tax purposes.
If the centre of vital interests cannot be determined, in the jurisdiction in which the taxpayer has an habitual abode; and Alternatively, if it is found that the centre of vital interests cannot be determined, the taxpayer relied on his treaty residence being South Africa on the basis that he also had an habitual abode in South Africa, which means that his South African nationality will determine his treaty residence.His personal and economic relations were closer to South Africa, and on that basis he was treaty resident in South Africa during the period in dispute.
The judgment thoroughly analysed the taxpayer’s lifestyle, family history and relationships, economic interests, hobbies, philanthropic causes supported, political involvement, health service providers, and many more. It demonstrates how strongly the residence status of a taxpayer depends on the facts.
The taxpayer is a family man and his movements during the period under consideration were, to a large extent, informed by his wife and children’s presence in the UK for purposes of the children’s education. The taxpayer spent as much time as possible with them in the UK during school term, and regularly attended their school activities over weekends.
The allocation of taxing rights in respect of a person’s salary takes account of the jurisdiction where the employment services are physically rendered, but that test is inappropriate when a taxpayer’s economic relations are determined for purposes of the tiebreaker – the latter looks at where the work done has an impact, and the relationships created by, and inherent to, the work, rather than the place where the work is performed.
His involvement in a variety of South African family businesses was found to constitute close economic ties with South Africa, even if the taxpayer may have been involved in these while he was physically present in the UK.The main homes of the taxpayer in both South Africa and the UK were fully staffed, excellently maintained, they offered similar facilities and were always available for the taxpayer and his family to occupy.
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