Australia’s tax system is being weaponised by perpetrators of domestic abuse – it must stop

UNSW Sydney Business School

Academics from UNSW Sydney Business School and the UNSW Gendered Violence Research Network have developed a set of recommendations to assist the federal government with reforms to make Australia’s tax system less vulnerable to weaponisation by abusers.

The Australian Tax Office is frequently being implicated in situations where abusive partners deliberately put company tax debts in the name of their current or ex-partners, leaving them to carry them. 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 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. The paper is led by Associate Professor Ann Kayis-Kumar, with UNSW colleague Professor Jan Breckenridge from the UNSW Gendered Violence Research Network and collaborators from Redfern Legal Centre, the Tax Institute, Villanova University and Johnson Winter Slattery. Dr Kayis-Kumar said, “If Australia is serious about tackling this insidious problem, we must urgently modernise the tax system to identify and support victim-survivors – rather than inadvertently being complicit in enabling and exacerbating the abusive tactics of perpetrators. 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. We don’t. We should.” Intimate partner financial abuse as a strategy of coercive control perpetrated as part of domestic and family violence occurs in nearly all family violence cases, impacts over 2.4 million Australians, and costs the national economy over $10.9 billion annually. Page 2 This is exacerbated by the ongoing cost of living crisis and is particularly troubling given financial stress for women is significantly associated with economic abuse. This is reflected in client base of UNSW Tax and Business Advisory Clinic where over 80% of female clients now report economic abuse. This is up from around 60% in previous years. ‘Sexually transmitted tax debts’ – which average $90,000 – often arise from business debts, bankruptcy, corporate directorships and director penalty notices, and have severe ramifications, leaving victim-survivors with debilitating financial burdens, reduced assets, insecure housing and prolonged economic instability even after leaving abusive relationships. Financial instability is a key factor driving women back into abusive relationships, so it is imperative that the design and operation of the tax system not be vulnerable to manipulation and misuse by perpetrators of intimate partner financial abuse. The paper presented to the Assistant Minister for the Prevention of Family Violence and for Social Services, Justine Elliot, asks the government to switch the debt to the person responsible for creating it.

UNSW Gendered Violence Research Network Professor Jan Breckenridge is

/Public Release.