Federal Budget
Helping vulnerable taxpayers and simplifying the residency rules
Published on: 19 Mar 2025
SYDNEY, 19 March 2025
Supporting our community’s most vulnerable
Carefully designed, the tax system can help support our community’s most at risk — but as it stands, the current system can enable economic abuse. The Tax Institute is calling for changes that will help safeguard vulnerable taxpayers against long-lasting effects of economic abuse.
Economic abuse is a pervasive form of domestic violence affecting at least 1.6 million women and 745,000 men in Australia each year. It involves the exertion of control over, or the sabotage of, finances with the objective of undermining the economic security and independence of the victim-survivor. Economic abuse can manifest in tax-related actions such as the unauthorised filing of returns, establishing and assigning spouses as directors of companies without their knowledge or consent, or the mismanagement of trust distributions, thereby creating liabilities for the victim-survivor.
The Tax Institute is of the view that the Government can play a pivotal role in the identification of abuse indicators and the provision of safe support to victim-survivors. To provide some much-needed support for these vulnerable taxpayers, the Federal Government should start by changing the law to enable the ATO to provide victim-survivors relief from tax debts on the grounds of economic abuse. This would bring Australia in line with the United States, which has had in place ‘innocent spouse relief’ since 1971.
Julie Abdalla, Head of Tax & Legal at The Tax Institute, said, ‘The tax system plays a fundamental role in ensuring that we collectively support the most vulnerable in our community. Taxes are used to fund social security programs and often also contribute to vital community programs supporting victim-survivors of abuse.’
‘When the tax system is weaponised and used as a tool of abuse, it can be incredibly damaging to victim-survivors and pervasive beyond their tax affairs. Creating provisions in the tax law that minimise that harm and ensure the system does not perpetuate it should be top of mind for policy makers and government.’
Abdalla added, ‘To adequately address this issue, implementing tailored legislation, policy, and practice measures are necessary. Only then can we mitigate the long-term economic insecurity and broader consequences faced by victim-survivors.’
‘The Tax Institute is passionate about advocating for changes to support those in need, including changes to law, administrative change, and through supporting the activities and services of the National Tax Clinic Program so the most vulnerable members of our community can seek help.’
Individual tax residency
Separately, as part of the Federal Budget 2021–22, the Government proposed reforms in response to the Board of Taxation’s recommendations to modernise the individual tax residency rules. Following a 2023 Treasury consultation, no progress has been made.
The Tax Institute is of the view that introducing a simpler framework would enable individual taxpayers to more easily discern their tax liability, provide certainty and reduce compliance costs for taxpayers. However, further consultation is needed to ensure any new rules are fit for purpose and align with broader tax reform objectives.
ENDS
Tagged
- Federal Budget
Other media releases
-
ATO casts the NALI net too wide says Joint Bodies -
Tax reform heavyweights weigh in on the path to lasting change in our system -
The Tax Institute COVID-19 response