Long after victim survivors escape an abusive relationship, they are discovering piles of tax debts for companies they didn’t even know they were signatories to, according to experts from UNSW.
The Australian Tax Office (ATO) is frequently being implicated in situations where abusive partners deliberately put company tax debts in the name of their current or ex-partners. This leaves the current or ex-partner to carry debt they weren’t responsible for creating and are pursued by the ATO for it.
In an effort to make Australia’s tax system less vulnerable to weaponisation by abusers, 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 the necessary reforms.
Their paper asks the government to switch the debt to the person responsible for creating it.
It’s 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.
“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,” said Dr Kayis-Kumar, the founding director of UNSW Tax and Business Advisory Clinic, a free service where victim-survivors of family violence learn difficult truths about their debts.
‘Sexually transmitted tax debts’ as the clinic calls them, can average $90,000 and often arises from business debts, bankruptcy, corporate directorships and director penalty notices.
These have severe ramifications that are leaving victim-survivors with debilitating financial burdens, reduced assets, insecure housing and prolonged economic instability even after leaving the abusive relationship.
Australia vs The United States
In Australia, intimate partner financial abuse occurs in nearly all family violence cases as a strategy of coercive control. It impacts over 2.4 million Australians, and costs the national economy over $10.9 billion annually.
This is exacerbated by the nation’s ongoing cost of living crisis and is particularly troubling given financial stress for women is significantly associated with economic abuse.
And it’s reflected in the UNSW Tax and Business Advisory Clinic’s client base, where over 80 per cent of female clients now report economic abuse, a number that’s up from around 60 per cent in previous years.
Dr Kayis-Kumar has said that Australia should look to adopt policies that have seen success in other countries, particularly the United States, which “has had innocent spouse relief for decades”.
This includes “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,” she said, adding that Australia doesn’t have this, but “we should”.
These US provisions apply because the country offers jointly filed “married” tax returns, but in Australia, tax returns are filed by individuals, Dr Kayis-Kumar has explained in an article published by The Conversation.
“Australia’s adoption of US-style rules could provide a model for other jurisdictions, increase tax debt collection (as perpetrators are likely to have better capacity to pay than victims) and foster greater confidence in the Tax Office,” she writes.
With financial instability being a key factor driving women back into abusive relationships, Dr Kayis-Kumar and fellow UNSW experts are emphasising that it’s imperative the design and operation of the tax system not be vulnerable to manipulation and misuse by perpetrators of intimate partner financial abuse.
If you or someone you know is experiencing, or at risk of experiencing, domestic, family or sexual violence, call 1800RESPECT on 1800 737 732, text 0458 737 732 or visit 1800RESPECT.org.au for online chat and video call services.
If you are concerned about your behaviour or use of violence, you can contact the Men’s Referral Service on 1300 766 491 or visit http://www.ntv.org.au.
Feeling worried or no good? No shame, no judgement, safe place to yarn. Speak to a 13YARN Crisis Supporter, call 13 92 76. This service is available 24 hours a day, 7 days a week.