Monique Robb is interviewed by AccountantsDaily following a recent decision in which The High Court ruled in favour of a taxpayer shifting her debts onto her spouse during their divorce property settlement proceedings.
Speaking to Accountants Daily, Swaab senior associate, Monique Robb said the case was a departure from the norm but believes it remains a difficult case to argue.
“The controversy in this case arises because the ATO took the view that the Crown was not bound by the Family Law Act, i.e. the court could not order the ATO to substitute one party for another in the way it could with an institutional lender, for example. The High Court disagreed,” said Ms Robb.
“As the court needs to ensure the substitution does not negatively affect the creditor in question, it is likely to remain rare for the court to order such a substitution. I anticipate that parties may seek orders to this effect on the back of Tomaras, but I am doubtful that the court would find many occasions where it was appropriate to make the orders.
“In my view, the High Court has confirmed the power of the court to substitute parties extends to debts owed to the Commonwealth, but has not increased the likelihood that one spouse will be made solely liable for the tax debt of the other party. I expect that it will remain a difficult argument, which would be significantly impacted by the ability of the substituted party to pay the debt.”
Read the full article on Accountants Daily here.
To understand more about the case, read the article written by Monique Robb and Katerina Lonergan ‘Commissioner of Taxation v Tomaras: High Court rules that tax debts can be transferred between spouse parties.’