The High Court has confirmed in the recent case of Commissioner of Taxation v Tomaras  HCA 62, that debts owed to the ATO can now be assigned to another party in family law property proceedings pursuant to s90AE Family Law Act (1975)(Cth).
As Caroline Granger, Family Lawyer at Robertson Hyetts Solicitors explains, A “Tomaras order”, or substitution order, can be made if it is reasonably necessary or reasonably appropriate or adapted, the party taking assignment of the debt can pay the debt in full and it is just and equitable to make the order, amongst other factors.
The party taking assignment of the ATO debt will have the right of objection and appeal that is usually given to taxpayers.
Previously, a party who had an ATO liability had to shoulder that burden on their own; even if they couldn’t repay the debt.
As the result of this decision, ATO debts can now be transferred to a spouse if it would be just and equitable to do so. Family law litigants may find themselves paying for their ex-spouse’s tax debt.
For further information or to book an appointment with Caroline Granger, please contact our office on 03 5472 1588.