DEBT & DOMESTIC VIOLENCE: Financial Abuse & the Shifting of Debt Through Family Court Orders
Family Law matters are, by their very nature, deeply distressing. Imagine though how that angst escalates, when in the midst of your family break down you are subjected to the wrath of the Taxation Department seeking to pit its authority and power against the Family Court, in the High Court! It is a power struggle not even the best “Suits” writers could script.
Nevertheless, this is precisely what happened in the recent decision of Commissioner of Taxation v Tomaras. Now of course the decision raised a cacophony of commentary from all manner of Family and Taxation Law experts, on social media, professional publications and the like. Properly, much of the commentary and analysis was around the key issue of whether the Family Court has the jurisdictional authority to order the ATO to transfer a party’s taxation debt in a Family Court proceeding. For those who missed it – the Family Court does have that power, and I recommend readers seeking to understand the more technical aspects to read the many learned articles on the topic.
But in this piece, I shine the spotlight on the impact this decision may have in Domestic Violence situations, more particularly, Financial Abuse. I note with some irony that such a power struggle between two mighty institutions could provide hope and relief to the many hundreds of thousands who suffer each year, through a different, and much more personal, yet deeply damaging kind of power struggle – Domestic Violence.
It is well established that in family law property matters, the Court can hold both parties equally responsible for debts acquired during a relationship or, depending on the circumstances, hold one partner responsible for the debt of the other. Additionally, the Court can prohibit a (third party) creditor from pursuing a party for a debt and require they seek payment from the other party.
In short, if you acquired a debt in a relationship, now, even a personal tax debt, due to your ex-partner’s actions, you may have grounds to seek the debt be transferred to them.
This is where circumstances of Financial Abuse in Domestic and Family Violence comes sharply into focus. Such abuse not only involves manipulating and controlling an individual’s own or joint finances, but often simultaneously exploiting and sabotaging that person’s economic position.
Near 16% of all Australian women and almost 90% of people experiencing domestic violence, encounter financial abuse.
Often the behavior begins gradually and over an extended period of time, before a party realises the seriousness of the situation. Other times it can be more blatant, forcing a party to put their name on accounts or to sign documents. The situation can leave a person feeling depressed, embarrassed and helpless. These feelings, along with the prospect of being burdened with an insurmountable debt are factors that frequently result in a person remaining in an abusive relationship. But what if you can be freed of that debt?
What the decision of Tomaras reveals is that there is scope for the court to order a violent party to carry the debt they force onto another through their acts of Domestic and Family Violence.
Of course, any shifting of debt would need to be determined based on individual facts and like all property settlements, be “just and equitable”.
The keys factors may be the amount of control and/or lack of knowledge a person had of the situation.
Considering the epidemic of Financial Abuse, if a perpetrator can be shown to be the more financially capable party, the shifting of any debt, including a tax debt, may not be as isolated as first thought.
To download a copy of this blog, click here. If you would like to confidentially and safely discuss your concerns about Domestic and Family Violence please call me, at Robbins Watson Solicitors on: 55769999
1. The information on this blogpost is of a general nature, not intended to be specific professional advice.
2. Please seek the opinion of a professional to advise you of your situation.
3. The author’s opinions are his/her own and do not represent the views of any other person, firm or entity.
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 Commissioner of Taxation for the Commonwealth of Australia v Tomaras & Ors  HCA 62
 Adams AE, Sullivan CM, Bybee D, Greeson MR. Development of the Scale of Economic Abuse. Violence Against Women. 2008; 14(5): 563-88.
 The Center for Relationship Abuse Awareness, http://stoprelationshipabuse.org/educated/types-of-abuse/economic-abuse/