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The ATO has welcomed the Taxation Ombudsman’s review of financial abuse within the tax system, and agreed with recommendations put forward in the report.
ATO welcomes IGTO recommendations to prevent financial abuse
07 April 2025
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7 minute read
The review by Ruth Owen, Inspector-General of Taxation and Taxation Ombudsman (IGTO), found that Australia’s tax system has been used as a weapon for financial abuse. It made a series of recommendations for the ATO to prevent and detect abuse in the tax system.
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“We agree with all recommendations provided in the Tax Ombudsman’s report, and value the perspectives of those who contributed to the report, including the lived experience of victim survivors,” the Tax Office responded in a release.
“The ATO welcomes insights on how to further strengthen and coordinate support for taxpayers that have experienced financial abuse, including considering improvements to our existing procedures in place to support these taxpayers.”
The IGTO recommended that the ATO boost training for all frontline officers, explore available opportunities to remove debts from victim-survivors of financial abuse and clarify how and when they can report potential financial abuse to law enforcement.
The ATO should also better prevent and detect abuse when it comes to light, including using evidence from trusted providers so victim-survivors are not required to repeat their history to multiple agencies, the IGTO said.
One case study included in the report showed that one woman had accrued more than $50,000 in GST, PAYG withholding and super guarantee charges after her ex-partner nominated her to be the director of a business without her knowledge.
The ATO officer was surprised that the client was unaware of her own director appointment, suggesting a lack of knowledge regarding how financial abuse can be perpetrated in the tax system, the IGTO said.
In another case, a high-earning businesswoman was left homeless with her two children following the breakdown of her marriage, which had involved financial abuse that left her with multiple debts with the Tax Office and Services Australia.
“My experience with the ATO traumatised me more than the original abuse. It was compounded by the way the system works ... like when you're stuck in a spider's web,” she said.
She was left in a confusing situation where the Family Court would not release her assets until she sought to have her tax interest remitted with the ATO, but the ATO would not remit the interest because she appeared to have income and assets to pay off the debt, on paper.
“It’s shocking that the tax system is being used as a weapon to inflict financial and emotional damage on unsuspecting and vulnerable individuals,” Owen said.
“The ATO can’t solve this issue on its own. However, it can start by ensuring it uses all its existing powers to offer release or relief from tax debt to victim-survivors and provide the relevant training to its workforce to understand and respond to financial abuse in an appropriate way when it arises.”
Data from the Australian Bureau of Statistics indicated that 1 in 6 women and 1 in 13 men have experienced economic abuse by an intimate partner.
“Financial abuse is a serious issue which can have significant impacts for victims,” the ATO said.
“We commit to further engagement and consultation with other government agencies and community groups and leveraging existing support and programs to address financial abuse within the tax system.”
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