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Better co-ordination between legal, financial and social services and increased awareness is critical to address financial abuse in the tax system, says CPA Australia.
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CPA outlines gaps in system for combating financial abuse
19 December 2024
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CPA Australia has called for a more integrated approach to addressing financial abuse in the tax system and increased education in response to the Inspector-General of Taxation and Taxation Ombudsman’s (IGTO) review.
The IGTO launched its review into the ATO's identification and management of financial abuse within the tax system late last month to examine the ATO's current systems, policies, and processes for dealing with financial abuse in the tax system.
CPA Australia warned that financial abuse, particularly in the context of taxation, can impose devastating financial and emotional burdens on victim-survivors.
Based on feedback from members, CPA Australia said financial abuse often intersects with domestic violence, particularly during and after a separation or divorce.
"A common theme is that financial abuse often escalates in the context of divorce or separation, where one partner may exert control over the other’s financial resources as a means of manipulation or coercion," the professional body said.
"This is particularly evident in cases where one partner has historically managed the finances, leaving the other with limited knowledge or access to financial resources."
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CPA Australia tax policy lead Jenny Wong said systemic inadequacies within the legal and financial systems also contribute to the prevalence of tax and financial abuse in Australia.
"Victim-survivors often face significant barriers when seeking legal recourse or financial support, including a lack of awareness about their rights and available resources," Wong said.
"The complexity of financial systems can deter individuals from pursuing claims or accessing support, particularly when they are already in a vulnerable state."
Wong said there is also a lack of co-ordination between legal, financial and social services which can leave victim-survivors feeling isolated and unsupported.
"This systemic fragmentation necessitates a more integrated approach to addressing financial abuse, ensuring that victim-survivors have access to comprehensive support that encompasses legal, financial, and emotional assistance," she said.
Awareness and education are also critical in combating tax and financial abuse, according to CPA Australia.
"Many individuals are unaware of the behavioural indicators of financial abuse or the resources available to them as a victim-survivor," Wong said.
"Increasing awareness through community education programs can empower individuals to recognise abusive behaviours and seek help. Educational initiatives that focus on financial literacy, budgeting, and understanding financial rights can equip individuals with the knowledge necessary to protect themselves from financial exploitation."
CPA Australia said many of its members who provide professional services to either or both the perpetrators and victim-survivors of financial abuse in business and personal matters are unaware of the behavioural indicators of financial abuse or the appropriate manner in which they can support the victim-survivor including government and community bodies and resources.
"We support educating our members as appropriate while acknowledging as a professional accounting body we are not experts in this area," Wong said.
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