Thiel v The Commissioner of Taxation

The Commissioner of Taxation (the respondent) sought special leave to appeal a decision concerning the interpretation of an international double taxation agreement. The applicant, Thiel, contended that certain profits were not subject to Australian tax under the agreement.

The central legal issue before the High Court was the meaning of the phrase "enterprise carried on" as it appeared in Article 7(1) of the relevant double taxation agreement. This phrase was defined in Article 3(1)(f) as "an enterprise carried on". The court was required to determine whether the activities in question constituted an "enterprise carried on" for the purposes of the agreement, and how Article 3(2), which stipulated that undefined terms should take their meaning from domestic law unless the context required otherwise, applied to this determination.

The respondent argued that special leave should be refused on several grounds, including the perceived insignificance of the point of law, the narrow application of the issue, and the fact that the phrase "enterprise carried on" had been consistently used in numerous international double taxation agreements, including Australian ones, since at least 1953 without giving rise to dispute or litigation. The respondent also noted that the phrase appeared in the model treaty, suggesting its widespread international usage. The court was informed that there were no prior decisions in Australian courts addressing the meaning of this phrase.