Authors: A/Professor Ann Kayis-Kumar ATI, Founding Director of the UNSW Tax and Business Advisory Clinic, Jasmine Opdam, Senior Policy & Advocacy Officer at Redfern Legal Centre’s Financial Abuse Service NSW and Karen Liew, Senior Tax Advocate at CA ANZ

Tax professionals are now in the midst of tax season, meeting clients in preparation for lodging their 2024 tax returns. What might not be on a tax agent’s radar when meeting their clients are signs of financial abuse or economic abuse in a relationship.

However, financial abuse impacts over 2.4 million Australians, occurs in nearly all domestic violence cases, and costs victim-survivors and the national economy over $10.9 billion annually. We simply cannot afford to be blind to it.  

What is financial abuse? 

Broadly, financial abuse refers to:  

[a] pattern of control, exploitation or sabotage of money, finances and economic resources which affects an individual’s capacity to acquire, use and maintain economic resources, threatening their economic security and self-sufficiency. 

Financial abuse almost always occurs alongside other forms of domestic violence, including physical, sexual, psychological and emotional abuse, as well as threats, intimidation and controlling behaviours. 

However, until recently, the terms ‘financial abuse’ and ‘economic abuse’ have not been widely used, nor have these tactics and behaviours been well understood as part of the broader experience of domestic violence.  

Indeed, victim-survivors themselves may not identify their experience as domestic violence — this is particularly the case where a strict gendered division of financial management exists within the relationship. 

How is the tax system abused by perpetrators? 

The tax profession is uniquely poised to identify and support people (predominantly women) experiencing intimate partner financial abuse — and to disrupt abuse by perpetrators.

Situations where tax professionals may be unwittingly establishing and maintaining structures that enable economic abuse include where they are asked to take action that impacts a client’s spouse (keeping in mind that the term ‘spouse’ refers to a legally married spouse, former spouse, de facto partner and includes a same-sex spouse or partner).

For example, this could look like: 

• Completing the client’s spouse’s tax returns without verifying the spouse’s written consent. 
• Establishing a company in the client’s spouse’s name (jointly or solely) without verifying the spouse’s written consent and/or confirming whether the client’s spouse has access to the company bank account. 
• Assigning family business (company, partnership or trust) dividends and/or distribution payments to the client’s spouse’s nominated bank account, without verifying that the spouse actually has access to said bank account. 
• Similar to the above, if the trust retains the funds representing distributions to the spouse within the trust and no cash distributions are made (other than to cover living expenses if they are not paid a salary), then economic abuse may be enabled by failing to verify with the spouse that they are aware a tax liability will arise despite the trust distribution not being paid into their bank account (and remaining an unpaid present entitlement). 
• Correcting a client’s prior year taxable incomes (where income was previously understated), without checking whether this might result in the creation of a Centrelink debt for overpayment of Family Tax Benefit in relation to the client’s spouse. 
• Not providing documentation or refusing to disclose financial information to the client’s spouse, especially in situations where the spouse is still recorded as Director when requesting company documents, or was Director for the period for which they are requesting documents. 

Unfortunately, these are situations seen by the UNSW Tax and Business Advisory Clinic, one of 15 clinics funded by the National Tax Clinic Program. 

How can the tax profession respond? 

It is easy to underestimate the role that financial (in)security plays in domestic violence. Women who are financially insecure may feel unable to leave an abusive relationship or that they have no choice but to return to their abuser. Once they do leave abusive relationships, women generally do so with reduced assets and superannuation, insecure housing and longer-term economic insecurity. It is also likely that the economic abuse will continue after the relationship has ended, albeit with slightly different tactics. 

With end of financial year and tax return lodgements providing tax agents with an annual touch point with clients, tax agents are well placed to identify signs that may indicate financial abuse within a relationship.

During this tax season, consider: 

• whether you or your colleagues have ever come across any one of the six situations listed above; and 
• whether you or your colleagues have ever refused to provide company and tax documents or disclose information to a client’s spouse. 

If you suspect that you may be enabling a client to commit financial abuse, try to verify the spouse’s written consent, verify the spouse is aware of their trust distributions or confirm with the spouse that they have access to the nominated bank account. If you are not able to obtain verification or consent from the spouse, then you may need to stand down from the engagement of work.

Tax agents cannot be involved in facilitating financial abuse. Consider your ethical obligations under: 

• the Tax Agents Services Act 2009, Code of Professional Conduct item 4 – you must act lawfully in the best interests of your client. 
• the APES 110 Code of Ethics for Professional Accountants – integrity and professional behaviour.  

To work out your ethical obligations, you will need to determine who is your client when engaging in the work. Both spouses may be your client or maybe only one spouse is your client. Confidentiality of client information will be an important obligation to navigate.

Chartered Accountants recognising the signs of financial abuse can seek further guidance from the CA ANZ Professional Standards team who can help clarify your ethical obligations and provide practical advice directly via telephone or email. This free support service is completely confidential and available to all current members.

One of my clients might be experiencing financial abuse – how can I help? 

If you think one of your clients is a victim-survivor of financial abuse, it is critically important to approach the subject with the victim-survivor’s privacy and safety front of mind, without the perpetrator being made aware. 

You will need to speak to the victim-survivor separately from their spouse.

Rather than offering immediate solutions, help them explore their options. Phrases like “Do you feel like you have enough control over your tax and business decisions?” or “I think you might be in a financially vulnerable position. Would you like me to give you a phone number for a support service?” 

Understand that leaving or confronting financial abuse can be dangerous. Always respect their autonomy and decisions. Victim-survivors may not be ready or able to make immediate changes to their financial situation, so all we can do – and that we’re qualified to do – is to offer support.

Support services contacts 

The below services provide free and confidential support. 

Family and domestic violence support services: 

• 1800 RESPECT (24-hour national helpline): 1800 737 732 
• Men's Referral Service: 1300 766 491 
• Lifeline (24-hour crisis line): 131 114 
• Relationships Australia: 1300 364 277 

Financial counselling and pro bono tax services: 

• National Debt Helpline: 1800 007 007 
• Small Business Debt Helpline (national): 1800 413 828 
• National Tax Clinic Program (for tax clinics in each state)

Financial abuse specialist legal and non-legal support: 

• Financial Abuse Service NSW at Redfern Legal Centre (New South Wales): 0481 730 344

There is limited specialist legal assistance available in Australia for victim-survivors of financial abuse. This presents a significant gap in frontline support. Redfern Legal Centre’s Financial Abuse Service NSW is advocating for the government to fund specialist legal services in other states and territories so hopefully we will see more support available to help people in need across Australia. 

An earlier version of this article was published in The Tax Institute’s TaxVine 19, ‘Domestic violence – What’s tax got to do with it?’ on 31 May 2024.