Treasury consults shifting tax debts from victims to abusers

Treasury is consulting on extending the powers of the Australian Taxation Office (ATO) to strengthen its response to financial abuse.

This would allow the taxation office to pause debt recovery against victim-survivors, pursue the debts from perpetrators where the abuse involved fraud or other actionable misconduct, and, where appropriate, waive the victim-survivor's debt.

The consultation paper recognised existing administrative responses for victim-survivors remain subject to the governing legal framework for tax debt recovery, and as a result, they may continue to face the psychological and practical burden of debts that arose through abuse, all while the perpetrator generally escapes accountability.

"Financial abuse is often one part of a broader pattern of coercion, control and abuse designed to remove a person's independence and limit their choices," assistant treasurer Daniel Mulino said.

"The effects can follow victim-survivors for years, long after the relationship has ended, through debts, financial insecurity and lost opportunities.

"We have a responsibility to ensure our financial systems cannot be used as a tool for abuse, and that victim-survivors receive the support they need to rebuild their lives."

To pause recovery of a debt, the ATO commissioner would need to be reasonably satisfied, among other things, that the debt would not have arisen but for the perpetrator's actions, and that those actions involved fraud, dishonesty, gross negligence, or intentional or reckless disregard of the tax law.

Attorney-General Michelle Rowland said the consultation seeks to provide the courts greater flexibility to transfer a tax debt to the person responsible for financial abuse in family law proceedings.

"The change would mean victim-survivors would no longer need to engage the ATO's administrative processes when they are already before the courts," Rowland said.

"This government is committed to breaking down barriers for victim-survivors, because our system should help them recover from family violence."

The consultation is divided into two parts. Part one seeks feedback on reforms relating to fraud against the taxation system announced in the 2026-27 Budget. Part two seeks feedback on possible additional options to strengthen responses to financial abuse, coercive control, systems abuse and related debt outcomes across the taxation, superannuation, social security, family payment and child support systems.

Treasury is seeking feedback on the consultation until 27 November 2026.