Federal Commissioner of Taxation v Tomaras

The High Court of Australia considered a question of law stated by the Full Court of the Family Court of Australia, which arose from proceedings between a wife and the Federal Commissioner of Taxation. The wife sought an order under section 90AE(1)(b) of the *Family Law Act 1975* (Cth) to substitute her husband as the sole debtor for certain taxation liabilities owed to the Commissioner, effectively transferring her debt to him. The Commissioner had intervened in the Family Court proceedings.

The central legal issue before the High Court was whether section 90AE(1)-(2) of the *Family Law Act* granted the court the power to make the specific order sought by the wife, particularly in relation to a debt owed to the Commonwealth. This involved determining whether the Commonwealth, through the Commissioner, was bound by the provisions of section 90AE, and if so, the extent of the court's power to direct the substitution of a debtor in such circumstances. A further issue concerned the appropriateness of the stated case procedure given the preconditions for making such an order under section 90AE(3) were unlikely to be satisfied.

The High Court clarified that while section 90AE(1) does confer power to direct the Commissioner to substitute one party to a marriage for another in relation to a debt owed to the Commonwealth, the court's ability to make such an order is contingent on satisfying the preconditions outlined in section 90AE(3). These include a finding that the order is reasonably necessary or appropriate for dividing the property of the parties, that the debt is not foreseeable as remaining unpaid, and that the order is just and equitable in all the circumstances. The Court noted that the stated case procedure was inappropriate in this instance, and the answer provided was incomplete without these findings. The appeal was otherwise dismissed.