Domestic violence perpetrators are exploiting the tax system to saddle their victims with tens of thousands of dollars in unjust debts, sparking a call for the federal government to close the loopholes that are allowing the abuse.
Experts from the University of NSW’s Sydney Business School and Gendered Violence Research Network today released a set of recommendations to help the government prevent the weaponisation of the tax system.
The researchers say victim-survivors are having company debts that have nothing to do with them put in their name by abusive partners or ex-partners, often without their knowledge.
Under current Australian tax law, the victim is required to repay the debt regardless of whether it is rightfully theirs.
The average size of a “sexually transmitted tax debt” is $90,000, and can leave victims in vicious debt traps leading to insecure housing, losing assets and even going into bankruptcy.
“Long after the victim-survivors have escaped the relationship they discover they have been saddled with tax debts for companies they did not even know they were signatories to,” the Sydney Business School said in a statement.
“The ATO is pursuing debts from people who were not responsible for creating them.
“It sounds unusual but it is very common, especially this year as the ATO is playing catch-up pursuing business debts after a pause during the pandemic.”
Intimate partner violence-related financial abuse has been inflicted on 2.4 million Australians, the vast majority of whom are women, and costs the economy nearly $11 billion a year.
Researchers said while they have had constructive discussions with the Australian Taxation Office (ATO), new laws were needed to properly address the form of coercive control.
Associate Professor Ann Kayis-Kumar said one of the recommendations for the government was to adopt tax provisions that have been in place in the United States since the 1970s.
“If Australia is serious about tackling this insidious problem, we must urgently modernise the tax system to identify and support victim-survivors â rather than inadvertently being complicit in enabling and exacerbating the abusive tactics of perpetrators,” she said.
“The United States has had innocent spouse relief for decades, including specific tax relief for victim-survivors of intimate partner financial abuse so that the tax office only pursues the person actually responsible for creating the debt in the first place.
The researchers included the stories of a number of domestic abuse victim-survivors in their paper, including that of Carol*.
She had been coerced into signing paperwork by her former partner, who made her a company director without her knowledge.
After she ended the relationship due to domestic abuse, she was given a director’s penalty notice of about $175,000 from the ATO.
“Carol is currently in the process of defending the DPN, however, if this is unsuccessful, she will need to declare bankruptcy for a debt she was not aware of â nor responsible for creating,” the report stated.
The paper has been presented to the federal assistant minister for the prevention of family violence and social services, Justine Elliot, and requests the government change the law so debt is always attributed to whoever is responsible for creating it.
*Carol’s real name was not used to protect her privacy.
