‘Sexually transmitted tax debt’ warning

Woman worried about a bill. | Newsreel
The ATO has been warned that domestic violence victims could be caught up in a push to recoup business debts. | Photo: Vor Da (iStock)

An Australian Tax Office push to recoup business debts could lead to domestic violence victims being unjustly pursued.

Academics from UNSW Sydney Business School and the UNSW Gendered Violence Research Network have warned Australia’s tax system is being weaponised by abusers, who create “sexually-transmitted tax debt”.

Associate Professor Ann Kayis-Kumar said the Australian Tax Office was frequently implicated in situations where abusive partners deliberately put company tax debts in the name of current or ex-partners.

Dr Kayis-Kumar said long after survivors had escaped the relationship they discovered they had been saddled with tax debts for companies they did not know they were signatories to.

“The ATO is pursuing debts from people who were not responsible for creating them,” she said.

“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.”

In a paper, produced with Professor Jan Breckenridge and in collaboration with the Redfern Legal Centre, The Tax Institute, Villanova University and Johnson Winter Slattery, Dr Kayis-Kumar said Australia needed to modernise the tax system to identify and support victim-survivors, rather than inadvertently being complicit in 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.”

Dr Kayis-Kumar said intimate partner financial abuse, as a strategy of coercive control perpetrated as part of domestic and family violence, occurred in nearly all family violence cases.

She said it impacted over 2.4 million Australians and cost the national economy more than $10.9 billion annually.

“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.”

Dr Kayis-Kumar said over 80 percent of the UNSW Tax and Business Advisory Clinic’s female clients now reported economic abuse.

“This is up from around 60 percent 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.”

Dr Kayis-Kumar said financial instability was a key factor driving women back into abusive relationships, so it was imperative the design and operation of the tax system was not vulnerable to manipulation and misuse by perpetrators of intimate partner financial abuse.