DV abusers are using the tax system to lump their victims with huge debts

Experts from the University of New South Wales Sydney Business School and the Gender-Based Violence Research Network today published a set of recommendations to help the government prevent the tax system from becoming a weapon.

Researchers say surviving victims have business debts that have nothing to do with them, placed in their names by abusers or ex-partners, often without their knowledge.

Under current Australian tax law, the victim is required to pay the debt, regardless of whether it is legally owed to him.

The average “sexually transmitted tax debt” is $90,000 and can leave victims in vicious debt traps leading to insecure housing, loss of assets and even bankruptcy.

“Long after surviving victims have escaped the relationship, they find they have been saddled with tax debts for companies they didn’t even know they signed up for,” Sydney Business School said in a statement.

“The ATO pursues debts from people who are not responsible for creating them.

“It sounds unusual but it’s very common, especially this year when the ATO is playing catch-up chasing business debts after a pause during the pandemic.”

Financial abuse related to intimate partner violence has been experienced by 2.4 million Australians, the majority of whom are women, and costs the economy nearly $11 billion annually.

The researchers said that while they had had constructive discussions with the Australian Taxation Office (ATO), new laws were needed to properly address the form of enforcement.

Associate Professor Ann Kays-Kumar said one of the recommendations for the government was to adopt tax regulations that have been in place in the United States since the 1970s.

“If Australia is serious about tackling this insidious problem, we must urgently modernize the tax system to identify and support surviving victims – rather than being unwittingly 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 breaks for victims of financial abuse by an intimate partner, so the IRS only goes after the person actually responsible for creating the debt.

The researchers included the stories of a number of domestic violence survivors in their paper, including that of Carroll*.

She was forced to sign documents by her ex-partner who made her a director of a company without her knowledge.

After ending her relationship due to domestic violence, she received a director penalty notice of about $175,000 from the ATO.

“Carol is currently in the process of protecting the DPN, but if that is unsuccessful, she will have to declare bankruptcy for a debt she had no knowledge of – nor was she responsible for creating,” the report states.

The paper has been submitted to the federal assistant minister for family violence prevention and social services, Justin Elliott, and calls for the government to change the law so that debt is always attributed to whoever is responsible for creating it.

*Carol’s real name has not been used to protect her privacy.