A pioneering national study has shed light on the hidden toll of coerced business debt, revealing how business structures are weaponised to perpetrate financial abuse, resulting in long-term economic hardship.
The study, conducted in collaboration with the Economic Abuse Reference Group, Associate Professor Vivien Chen of Monash Business School and Jasmine Opdam, Senior Policy and Advocacy Officer at Redfern Legal Centre’s Financial Abuse Service NSW, is the first national study of its kind.
It highlights how women in heterosexual relationships are disproportionately the targets of financial abuse, which can have long-term impacts including bankruptcy, poverty, and homelessness.
The study finds that victim-survivors are frequently left with huge debts, sometimes amounting to millions of dollars, after being unknowingly or forcibly trapped in their ex-partner's business affairs.
Unlike consumer credit, business lending falls outside many of the legal protections designed to safeguard borrowers.
In many cases, victim-survivors only discovered the debts after being contacted by the Australian Tax Office or private debt collectors.
“Victim-survivors of coerced business debt don’t have access to free dispute resolution or hardship relief like they would with consumer debt,” said Jasmine Opdam. “Business creditors are not legally required to have hardship policies. These victim survivors often can’t afford legal representation, and the business structures they’re trapped in are costly and complex to unravel.”
The study set out to fill a knowledge gap in how business structures are used to perpetrate financial abuse and draws on interviews with 18 frontline professionals from 10 community organisations across Australia who support victim-survivors of financial abuse.
The study was conducted in collaboration with the Economic Abuse Reference Group, a network of over 60 Australian community organisations advocating to reduce the financial impacts of family violence.
These professionals described a consistent but under-recognised pattern of coercive tactics, including forged signatures, digital impersonation, or secretly installing victim-survivors as company directors.
The consequences are often life-altering: bankruptcy, homelessness, ruined credit histories, and barriers to accessing social security. Many are left unable to work or regain financial independence due to severe mental health impacts.
“Family violence is one of the leading causes of homelessness among women,” Ms Opdam said.
“Financial abuse traps victim-survivors in a cycle of poverty, and the psychological toll can be so devastating that some are unable to recover their independence.”
Monash Business School’s Associate Professor Vivien Chen said the research exposes a significant policy blind spot.
“While Australia has made progress in addressing financial abuse through consumer credit reforms, there has been little recognition of how company and tax systems can also be exploited to cause harm,” Associate Professor Chen said.
“We need to treat coerced business debt as a serious form of economic abuse and design safeguards to reflect that reality.”
The study calls for a series of reforms to prevent and mitigate harm from coerced business debt. Key recommendations include:
- Tightening safeguards in the director and ABN registration processes
- Extending consumer-style protections to small business lending
- Reforming corporation and tax laws to recognise that directors may be prevented from managing companies due to family violence
- Family violence policies modeled on the Australian Banking Association’s guidelines to encourage business creditors to respond constructively.
This compelling research highlights the urgent need for reform to ensure that victim-survivors are not left to carry the burden of debts they never chose to take on.
Case study 1
Lisa* She was a university graduate with postgrad qualifications. She stopped work when she had two children as her husband wouldn't allow her to work. His business failed, and he was deregistered [from his profession]. He then set up businesses, and unbeknownst to her, she was a director of the companies, and he hadn't paid the GST or the PAYG most of the time. He’d forced her to sign documents, obscuring them and, hence, she didn’t know what she was signing. She was very afraid. He was very assertive. If I can perhaps use a mild term, he was very assertive that she had to sign these documents otherwise the family's livelihood would stop, and they wouldn’t be able to maintain the family’s lifestyle unless she did this. The kids were at private schools. I've met her in person a number of times. She doesn't give the appearance of someone who's extravagant with her appearance, so it wouldn't have been her that was demanding this particular lifestyle. He'd registered her with an ABN and GST. He'd lodged her tax return using a fraudulently obtained email, so the accountant or the tax agent sent documents to that email that he then signed online and sent back. Her tax returns had included rental income, and showed that he paid her tens of thousands of dollars in wages and withheld close to half. Tax refunds were paid directly to his account. He also coerced her to move her superannuation over to his self-managed fund. He walked out of the house with a bag of clothes, and she later discovered that the house had a massive a mortgage of several million dollars which she had no capacity to repay. After he left, she received a Director Penalty Notice, which was when she discovered that she was a director of two companies. She’s still suffering, and her mental health, of course, has been terrible. Our client has been very reluctant to complain to anyone about his lack of child support. He's a finance manager, so he mustn't be lodging his payroll. There are no reports going to child support, and she doesn't want to report him. She's too frightened that if he loses his job, he'll move back to [location] and start harassing them again. Her two sons have been impacted so much. Can you imagine how those boys feel about what their father's done to their family? Because he did a tax return for the older son as well, declared that he paid wages, withheld half, and got the refund. Of course, the tax agent is complicit in this. The cost to everybody, the health system, is huge.
*Name change for privacy reasons.
Case study 2
After Monique’s* her husband moved interstate, she started getting contacted by the creditor for business loans. She discovered that she was a director for her husband’s shop although she never signed anything. The client looked at the documents and none of the signatures matched hers. She didn’t know who the witness for the contract was and didn’t understand why she was being chased for the debts, and so she contacted us. She had no income, no assets, was being supported by her adult children, and living with her son. She worked in the shop but was never paid as an employee. Before she contacted us, she withdrew all her super, which was about $30,000, to pay towards this debt. Later, the franchisor offered to pay $450 a fortnight towards the debt if she paid $150 a fortnight towards the debt. She was only receiving Centrelink of about $600 a fortnight, and the debt was $85,000. I spent a lot of time explaining to her that she was judgment proof and her life was important. Then the creditors served her a bankruptcy notice and she started paying her entire Centrelink income towards the debt.
*Name change for privacy reasons.
