Monique Robb in Accoun­tants­Dai­ly dis­cussing tax debts in divorce 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.’