Chapter 5Role of government

5.1The Centre for Women’s Economic Safety (CWES) emphasised the unique position government agencies are in to support victim-survivors of financial abuse:

Government agencies are especially well placed to make a positive difference in the lives of victim-survivors of financial abuse given their role in administering support payments, taxation, housing, health, licensing and registration, [and] transport.[1]

5.2This chapter of the report will focus on the role of government agencies in preventing and responding to financial abuse, including:

child support payments;

the tax system, including company directorships and trusts; and

Centrelink payments and debts.

5.3This chapter also explores whole-of-government reform options, including the establishment of an inter-governmental taskforce and mandatory training in family and domestic abuse awareness for frontline employees.

Child support

5.4Child support refers to money to be paid by a non-resident parent to a resident parent for the purpose of financially supporting children following parental separation.[2] Initially, the aim of child support was to ensure, wherever possible, that children enjoy the benefit of a similar proportion of parental income to that which they would have enjoyed if their parents lived together. It was based on the view that children should not be disadvantaged as a result of the separation of parents.[3]

5.5At the committee’s public hearing in Canberra, Dr Jennie Gray, Deputy Chair of Women’s Legal Services Australia, highlighted the extent and complexity of perpetrators using child support to further financial abuse:

As you’re very well aware, there is $2 billion in outstanding child support payments in Australia right now. It is incredibly complicated. Even when we talk to experts about how we untangle and devise strategies to ensure the correct payment of child support, there are so many loopholes in the taxation system.[4]

5.6Child support can be used as a tool to perpetrate financial abuse and in some instances the non-payment of child support is a form of family violence. The Economic Abuse Reference Group (EARG) highlighted the following ways perpetrators of financial abuse exploit child support:

refusing to pay child support or underpaying child support post-separation;

minimising their taxable income to lower their child support liability or make the victim-survivor liable to pay child support; and

making false declarations to Services Australia.[5]

5.7Parkerville Children and Youth Care emphasised that child support payments are overwhelmingly made to mothers (88 per cent). Parkerville Children and Youth Care further emphasised that this reflects the deeply gendered division of work and care in Australia that contributes to single parent poverty. As a result of perpetrators manipulating and weaponising the child support system, women and their children can find themselves trapped in hardship.[7]

5.8Single Mother Families Australia (SMFA) emphasised the importance of single mother receiving adequate income provision to support their families:

Children living in single parent families have a poverty rate of 39 per cent, more than three times that of couple families (12 per cent). Lack of money is also a powerful factor in perpetuating violence – around 1 in 5 women return to violent partners because they had no financial support, or nowhere else to go.[8]

5.9The Council for Single Mothers and their Children (the council) echoed this point and highlighted that a failure to collect child support payments can result in children entering poverty. Furthermore, the council stated that around ‘… one million children in Australia should be receiving child support through the scheme, but for more than half it’s impossible to determine if they are receiving it.’[9]

5.10The manipulation of the child support system causes direct harm to women and their children, particularly given that financial abuse via child support is highly likely to be one indicator in a larger picture of family and domestic violence perpetration. Additionally, non-payment is a direct privation for the child, and a denial of their right to share in the financial resources of their parents.[10]

5.11Parkerville Children and Youth Care recommended that non-payment, underpayment and delayed payment of child support be nationally recognised as a form of financial and economic abuse with long-lasting impacts on women and children.[11]

5.12SMFA acknowledged the Australian Government’s 2023-24 Budget announcement that would commit $5.1 million over five years to implement key recommendations made by the Joint Select Committee on Australia’s Family Law System.[12] These recommendations include:

re-establishing the Child Support Stakeholder Consultation Group;

appointing a Child Support Expert Panel to review various aspects of the system;

review compliance in the child support scheme, with a focus on collection and enforcement;

review the interaction between the child support scheme and Family Tax Benefit scheme to ensure vulnerable single parent families are financially supported after separation; and

undertake an evaluation of separated families to understand what support can be provided to parents with caring responsibilities where private collection arrangements have broken down.[13]

Child support collection

5.13Child support payments can be collected in three different ways: Agency/Child Support Collect, Private Collect, or self-management. Services Australia administers the Child Support Scheme and provides services to parents and carers. Services Australia also assists parents to apply for a child support assessment and facilitates the collection and transfer of child support payments.[15]

5.14The Child Support (Assessment) Act 1989 empowers Services Australia with various methods to recover child support without proceeding to court, including:

contacting the liable parent to discuss payment strategies;

garnishing the liable parent’s wages;

garnishing tax refunds;

deducting payments directly from the liable parent’s bank account;

deducting payments from Government income support; and

issuing a section 72A Notice to collect the outstanding debt.[16]

Source: Women’s Legal Services Australia, Non-Payment of Child Support as Economic Abuse of Women and Children: A Literature Review, May 2024, p. 33.

Private Collect

5.15Private Collect is where a child support assessment, agreement or court order sets out the amount of child support and the two parents work out how and when to pay this amount individually.[17]

5.16Financial Counselling Victoria submitted that, for safety reasons, victim-survivors might choose Private Collect in the child support system to avoid angering the perpetrator.[18]

5.17SMFA highlighted the following statistics on Private Collect:

nearly half (47 per cent) of women who ‘chose’ Private Collect said they were pressured by their ex-partner so that he didn’t have to pay child support;

70 per cent of financially abused women using Private Collect did not receive payments in full or at all; and

there were ‘consequences for women using Private Collect who tried to pursue underpayments from their former partners: more than 80 per cent reported their ex-partners became angry; 60 per cent said their ex-partner refused to pay; and half said their ex-partner became violent.[19]

5.18SMFA submitted that all payments collected through Private Collect assume the payment is made on time and in full. However, there are currently no mechanisms in place to ensure this is the case, other than the payee requesting a switch from Private Collect to Agency Collect. In circumstances where financial or other forms of abuse are being perpetrated, victim-survivors may be too fearful to request this change. Additionally, SMFA noted that, even if the payment method is changed to Agency Collect, Services Australia can generally only collect debts/arrears owed for the past three months, or nine months in exceptional circumstances, for Private Collect.[20]

Agency Collect

5.19When women moved from Private Collect to Agency Collect, more than half started receiving more or at least some child support payments. However, for approximately one quarter of women the move to Agency Collect resulted in the ex-partner no longer paying any child support at all.[21]

5.20SMFA highlighted that at least 200,000 people, primarily men who owe child support, have failed to submit a tax return for more than two years. Furthermore, over 16,000 have not filed a tax return for more than 10 years.[22]

5.21SMFA pointed out that the child support system accepted provisional income amounts allowing income to be adjusted downward to sit at minimal payment levels despite contradictions between payment levels and lifestyles. This directly impacts the amount of child support paid to victim-survivors.[23]

5.22Financial Counselling Victoria recommended the implementation of an annual review and reconciliation system for the child support system, to ensure that any amounts unpaid or underpaid are deducted from the perpetrator’s tax return or other financial assets and income streams (for example, from superannuation or a paycheque) and paid to the intended recipient. Where payments have been delayed, systems should be set up to calculate and charge interest on the payment.[24]

5.23SMFA echoed the above recommendation and stated that the Australian Tax Office (ATO) should mandate annual tax returns from both parties to assist with closing loopholes that allow minimisation of child support assessments.[25]

Child support payment collection by the Australian Tax Office

5.24The Brotherhood of St. Lawrence highlighted that child support was initially the responsibility of the ATO until transferred to Services Australia.[26] SMFA echoed this point and asserted:

There is irrefutable evidence that Services Australia’s collection and enforcement is not working. The high level of debt, the extended time of non-lodgement of tax returns, and the elevated amount of payees with minimal payments are clear indicators.[27]

5.25SMFA and the Brotherhood of St. Lawrence recommended that all child support collections be moved back to the ATO. SMFA asserted that the ATO would be best positioned to collect child support payments, address the astounding balance of outstanding payments, close assessment loopholes and uphold the expectations of timely and complete payments.[28]

Family Tax benefit payment

5.26The Family Tax Benefit is a financial support provided to low and middle-income families in Australia and is made up of two parts: Part A and Part B. Payment of Family Tax Benefit A (FTB-A) is based on the combined income of a family and is paid in respect of each eligible child. Family Tax Benefit Part B provides extra help for single parent families and couple families with one main income earner.

5.27At the committee’s public hearing in Canberra, Mr Benjamin Peoples, Group Manager at the Department of Social Services (DSS), explained the connection between child support and the family tax benefit:

The child support scheme’s interaction with family tax benefit works in that a parent must seek child support to meet their obligations under maintenance action and maintenance income tests. There can be reductions in the amount of payment that a person receives from their family tax benefit based on the amount that a former partner may declare in their income or the person’s efforts and activities to seek a child support payment.[29]

5.28Women’s Legal Services Australia pointed out that under FTB-A every dollar of child support received over the threshold of $1,883.40 (known as the Maintenance Income Free Area) reduces FTB-A payments by 50 cents until the single parent reaches the base rate of FTB-A.[30]

5.29CWES emphasised that the interaction between Child Support payments and FTB-A creates considerable stress. As the parent and child’s child support entitlement goes up, the amount of FTB-A goes down but, to determine how much of FTB-A should be paid, recipients must first claim child support from the other parent.[31]

5.30Furthermore, CWES emphasised that a family violence exemption to this calculation of FTB-A does exist for circumstances where a victim-survivor may be too fearful of the consequences of asking the perpetrator for child support. In 2023, 14 per cent of the total child support caseload had a child support exemption as a result of family and domestic violence.[32] With the family violence exemption, mothers remain entitled to income support payments and the family tax benefit above the base rate, but they miss out on supplemental income from child support. However, CWES pointed out that this effectively rewards the perpetrator for their violence and abuse.[33]

5.31Ms Sarah Holman, Community Legal Education and Communications Coordinator at Consumer Credit Legal Service Western Australia, pointed out a major flaw in the Family Tax Benefit scheme:

Let’s say, in an ideal world, they’ve assessed your child support arrangements and you’re getting your child support. It’s fair then, because what will happen is that if your assessed child support payment increases, then the benefits decrease. If your child support decreases, the benefits ideally should increase. That’s the general gist of it. What happens, though, if you’re not receiving those child support payments?[34]

5.32SMFA highlighted that victim-survivors who are collecting child support privately are assumed by Services Australia to be receiving 100 per cent of their assessed amount of child support, and Family Tax Benefit is calculated on the assumed receipt of child support even when it has not been received.[35]

5.33CWES submitted that perpetrators are able to manipulate the system and cause further harm by failing to disclose their income, leading to an estimate having to be made to calculate and pay the Family Tax Benefit payment to victim-survivors. Then, when the perpetrator later declares an income that reduces the FTB-A entitlement, a debt is generated for the victim-survivor to repay FTB-A.[36]

5.34This point was echoed by Ms Terese Edwards, Chief Executive Officer of SMFA, who emphasised:

… [the perpetrator] will lodge his tax return strategically, often when the children are at 18 years of age, or he will have structured his affairs knowing that there won’t be any collection of child support. But him lodging that return triggers a recalculation, and then what happens is Services Australia will go back to that woman and say: ‘You were right. For the last four or five years you should have been getting more in child support. But we have paid you too much in family benefits, so now we can’t collect that child support’, but you owe the government $10,000, $20,000, $30,000 or $40,000 because of the system, his behaviour and how it’s been allowed to be weaponised.[37]

5.35SMFA recommended that child support payments should be separated from Family Tax Benefit to ensure the scheme can no longer be exploited to create debts for victim-survivors and to ensure a safer financial environment for women entitled to receive child support.[38]

5.36CWES also recommended the delinking of child support from Family Tax Benefit payments. Additionally, CWES recommended the mandatory lodgement of annual tax returns for all parties involved in child support.[39]

Tax system

5.37When a perpetrator misuses business structures, such as trading under the victim-survivor’s Australian Business Number, appointing the victim-survivor as a director of a company without their consent, or reporting income distributions to the victim-survivors’ tax file number as a trust beneficiary or as an employee without them actually receiving funds, the victim survivor becomes responsible for unmet tax compliance obligations and unpaid tax debts.[40]

5.38EARG identified the following ways that perpetrators weaponise tax law and administration to generate debts in the name of a victim-survivor:

misreporting their own income resulting in a Centrelink debt in the victim-survivor’s name due to overpayment of Family Tax Benefit;

failing to lodge tax returns for two or more years to prevent payment of Family Tax Benefit to the victim-survivor;

minimising their taxable income to lower their child support liability or make the victim-survivor liable to pay child support; and/or

making false declarations to the ATO and other government agencies such as Centrelink and the Child Support Agency.[41]

5.39The National Tax Clinic Program emphasised that existing tax laws compel the ATO to pursue victim-survivors for tax debts through payment plans, offsetting of future tax refunds, issuing Director Penalty Notices, engaging external debt collectors or initiating bankruptcy proceedings, inadvertently enabling and exacerbating the cycle of abuse. The National Tax Clinic Program further emphasised that each of these pathways are financially debilitating for victim-survivors.[42]

5.40The Consumer Action Law Centre pointed out that, once a debt has been registered with the ATO, it is very hard for a person to challenge. Further, the Consumer Action Law Centre noted that legislation confers very limited discretion to waive or supress debts even in circumstances of financial abuse.[43]

5.41The UNSW Business and Advisory Clinic recommended that awareness of financial abuse within the tax profession be increased. The UNSW Business and Advisory Clinic asserted that it is problematic for tax professionals to be unwittingly or willingly establishing and maintaining structures that enable financial abuse, and an appropriate response would include mandatory domestic violence and coercive control awareness training.[44]

5.42The Centre for Women’s Economic Safety submitted that the ‘innocent spouse relief’ provisions of the Internal Revenue Service (IRS) in the United States provide a model for consideration by the ATO. The provisions allow the IRS discretion to offer relief from tax debt for victim-survivors of intimate partner financial abuse.[45]

5.43The National Tax Clinic Program recommended that consultations be undertaken to consider the adoption of United States-style innocent spouse relief in the Australian context.[46]

5.44This recommendation was echoed by the UNSW Tax and Business Advisory Clinic, who recommended a modernisation of hardship relief provisions by legislating to provide for ATO discretion in relation to tax relief for victim-survivors of financial abuse experiencing serious financial hardship.[47]

5.45The ATO submitted that it has had initial discussions with subject matter experts from the IRS on how the United States’ innocent spouse relief legislation is applied domestically and how IRS staff best support taxpayers eligible for this relief.[48]

Company directorships

5.46The UNSW Tax and Business Advisory Clinic highlighted how perpetrators commit financial abuse by making the victim-survivor the co-director or sole director of a company, while denying them any decision-making power and access to financial information. Perpetrators can manipulate this system as a way of protecting themselves from bankruptcy.[49]

5.47The Australian Securities and Investment Commission (ASIC) observed that in 2021 the Director Identification Regime commenced, which requires new and existing directors to apply for a director identification number (director ID) before being appointed to a company.[50]

5.48The UNSW Tax and Business Advisory Clinic asserted that creating more friction in the system by requiring a director ID is critical. However, the UNSW Tax and Business Advisory Clinic recognised that perpetrators may still pressure or coerce victim-survivors to log on to myGov or create a director ID, or may use the spouse’s ID documents to set up a myGov account or director ID or.[51]

5.49ASIC pointed out the benefits of linking director ID to the company register:

Linking director ID to the company register will help to prevent the use of false and fraudulent identities and improve communications with directors on appointment, as well as the traceability of directors’ relationships with companies over time.[52]

5.50ASIC highlighted that, in situations where it becomes apparent that a director has been appointed without consent, ASIC is able to remove the person as a director from the company register. However, ASIC acknowledged that, in circumstances of disagreement, ASIC does not generally take the role of arbiter in company disputes about officeholders.[53]

5.51EARG pointed out that a victim-survivor may be ineligible for Centrelink payments due to their directorship or suspected business assets, even where they have no knowledge of the business or their position as director. A victim-survivor may only learn that they are a director when their Centrelink application is refused.[54]

5.52The UNSW Tax and Business Advisory Clinic recommended that the ATO consider a policy response that allows the ATO to only pursue the perpetrator (in their capacity as a shadow or de facto director), provided there is sufficient evidence of the perpetrator’s control over the company.[55]

5.53EARG recommended that section 588H(4) of the Corporations Act 2001 (Cth) be amended to expand that defence to specifically recognise family and domestic violence as a reason why a director may not have taken part in managing a company.[56]

Director penalty notices

5.54Director penalty notices (DPN) present a particularly troubling issue because they require a director to provide full payment of company tax debts (or to liquidate the company) within 21 days to avoid personal liability fir the debt. This leaves many victim-survivors at risk of bankruptcy for tax liabilities of a company they did not control.[57]

5.55The National Tax Clinic Program recommended that victim-survivors be given a longer period to obtain advice and take steps to address issues if they have been appointed as a director of a company by the perpetrator.[58]

5.56Additionally, the National tax Clinic Program recommended amending legislation to provide a mechanism to defend DPNs in cases of financial abuse and coercive control.[59]

Trusts

5.57A trust is an obligation imposed on a person or other entity to hold property for the benefit of beneficiaries. The ATO noted that, while in legal terms a trust is a relationship not a legal entity, trusts are treated as taxpayer entities for the purposes of tax administration.[61]

5.58The ATO acknowledged that there are currently no specific provisions under tax legislation that address financial abuse by trustees of beneficiaries of trusts; however, it noted that relevant state and territories may have trust regulations. Additionally, if a beneficiary of a trust disagrees with a tax assessment made by the ATO, they can lodge an objection to the assessment provided they are within the required time period. [62]

5.59The ATO also acknowledged that there is no requirement for trustees under tax or superannuation law to report to the ATO changes in beneficiary circumstances or suspicious activity that may indicate financial abuse.[63]

Centrelink

5.60Centrelink can be a safety net for victim-survivors escaping family and domestic violence by providing victim-survivors with some financial independence and security to enable them to leave an unsafe relationship.[64]

5.61WEstjustice noted the following ways the Centrelink system can interact negatively on victim-survivors of family and domestic violence:

assumptions that a couple shares information and access to their income;

a perpetrator may misleadingly provide inaccurate information or coerce a victim-survivor to provide inaccurate information to Centrelink, leading to a debt being incurred under the victim-survivor’s name;

a victim-survivor may feel trapped in an unsafe relationship for fear of not having enough or any income, or by threats from a perpetrator to report them for providing false information to Centrelink; and

victim-survivors may face barriers in accessing Centrelink due to onerous administrative requirements and lack of access to required documents.[65]

5.62This section of the report will explore how Centrelink services are not supporting victim-survivors of financial abuse. These services include:

crisis payments;

Centrelink debt accruement; and

Centrepay.

Crisis payment

5.63The Centrelink crisis payment for extreme circumstances of family and domestic violence is an important payment to support victim-survivors leaving violent relationships.[66]

5.64Women’s Legal Service Victoria highlighted the following barriers to accessing these payments:

a seven-day timeframe to apply for the payment, which does not appropriately account for the complex dynamics of crisis and trauma experienced by victim-survivors leaving violent relationships;

the requirement to already be on an income support payment; and

the requirement that the victim-survivor has left their house due to extreme circumstance and intents to establish a new place of residence;

the requirement that, in the case of intimate partner violence, the person the victim-survivor is leaving (or that is being removed) needs to be registered as a partner on Centrelink records.[67]

5.65WEstjustice asserted that the crisis payment does not consider the safe-at-home approach to ensure victim-survivors are not always the ones who should leave their home, or that taking action to leave a violent partner does not inevitably lead to heightened risk of homelessness.

5.66WEstjustice recommended that section 1061JH of the Social Security Act 1991 be amended to remove the requirement that a person has to have left their home to qualify for the crisis payment. Additionally, the Act should be further amended to significantly lengthen the period in which a person is able to apply for a crisis payment.

Debts

5.67Women’s Legal Service Victoria submitted that Centrelink debts present significant challenges for victim-survivors, and that the process for seeking a debt waiver for Centrelink debts that have been incurred through financial abuse is very difficult. Additionally, Women’s Legal Service Victoria submitted that Family violence alone is not considered by Centrelink as a sufficient reason for a debt waiver and is not even considered a ‘special circumstance’ that would allow discretion to be exercised to waive the debt.[68]

5.68Under current legislation, ‘special circumstances’ waiver provisions cannot be applied where a victim-survivor has not complied with their social security obligations as a result of coercion or family and domestic violence. That is because discretionary debt waivers are not available if a debtor has ‘knowingly made a false or misleading statement or failed to comply with an obligation under social security law’.[69]

5.69Women’s Legal Service Victoria also noted that any Centrelink debts accrued as a result of financial abuse that have subsequently been repaid by the victim-survivor cannot be returned to the victim-survivor. Centrelink cannot retrospectively reconsider debts repaid by victim-survivors as a result of financial abuse.[70]

5.70WEstjustice recommended that 1237AAD of the Social Security Act 1991 be amended to ensure that a victim-survivor is not precluded from accessing a ‘special circumstances’ waiver if a perpetrator lies to Centrelink without the debtor’s knowledge or consent, or the debtor makes a false statement or misrepresentation as a result of coercion or duress by a perpetrator.[71]

Centrepay

5.71Centrepay is a voluntary bill paying service through Centrelink. Through this service, Centrelink can make regular deductions from social security payments to pay regular bills, and other expenses such as rent, electricity and phone bills.[72]

5.72Women’s Legal Service Victoria asserted that Centrepay provides an opportunity to identify victim-survivors of financial abuse. Centrepay agreements can also negatively impact a victim-survivor in circumstances where debt collectors placing victim-survivors on Centrepay arrangements (deducting their Centrelink income) when those debts have been incurred by a perpetrator through financial abuse or have been incurred by a victim-survivor as a means of survival.[73]

5.73Women’s Legal Service Victoria also noted that multiple Centrepay arrangements can be in place at once and this can significantly impact the amount of Centrelink income available to victim-survivors.

5.74inTouch pointed out that perpetrators can manipulate Centrepay arrangements, resulting in overpayments and the creation of additional unnecessary debt for victim-survivors. inTouch asserted that there is a need to ensure that sufficient safeguards are in place and information is provided in language and in culture.[74]

5.75Women’s Legal Service Victoria proposed a reduction to the number of commercial companies that can access Centrepay or the introduction of alerts when customers have a number of Centrepay leases, which could require they have a discussion with the customer that includes questions about financial abuse.[75]

Whole-of-Government reform

5.76This section of the report will explore reform options across the whole of government. These options include the establishment of an interdepartmental taskforce, family and domestic violence mandatory training, and specialised teams.

Inter-departmental taskforce

5.77As established in earlier chapters, financial abuse is relevant to a wide range of complex and intersecting laws, policies and practices. Change cannot be achieved by one department or agency alone, or amending each act, policy or guideline in isolation.[76]

5.78The Economic Abuse Reference Group Western Australia identified the following benefits for a national taskforce on financial abuse:

unified and intersectional approach;

focused expertise and specialisation;

data collection and research opportunities; and

additional support and protections for victim-survivors of financial abuse.[77]

5.79The EARG recommended the establishment of a Financial Abuse Taskforce to implement the legislative reform, policy and program recommendations from this inquiry. The Financial Abuse Taskforce should work closely with all relevant government departments and agencies through both informal day-to-day interactions and a formal Financial Abuse Working Group.[78]

5.80The EARG also recommended the establishment of a taskforce of all relevant government agencies to act holistically on the findings of this inquiry.[79]

5.81The Australian Banking Association noted its support in principle for the establishment of a financial abuse taskforce.[80]

5.82SMFA recommended the establishment of a taskforce led by the ATO to identify loopholes, recover funds and recommend policy and legislation adjustments to cease the pattern of abuse, prevent debt and encourage payments. Taskforce members should collaborate with the current child support consultation forum.[81]

5.83Ms Anita Challen, Assistant Commissioner at the ATO, acknowledged that the ATO would be well placed to contribute to a financial abuse taskforce:

I think the ATO would be certainly well placed in terms of the contribution to such a taskforce in terms of the information that we have already and the opportunity to contribute to that. I think we would agree that’s a considerable step forward and an important component in terms of working across other agencies and ensuring that there was consideration of how the whole system provided against this issue.[82]

Employee training and specialised teams

5.84Services Australia is in a unique position to provide timely and meaningful support to people affected by family and domestic violence, including identifying signs of violence and connecting customers to the support they need.[83]

5.85Services Australia has a Family and Domestic Violence Strategy (the strategy), with training mandatory for all staff. Under the strategy, Services Australia supports customers and staff affected by domestic, family and sexual violence. Support includes awareness raising, training, and process and procedural controls, a dedicated staff contact line and building connections inside and outside of the agency for ongoing support.[84]

5.86Services Australia highlighted the following measures in relation to customers leaving a relationship to protect customer privacy:

 de-linking a customer’s Centrelink record from their partner’s when they inform the agency they have separated, without the need for paperwork;

reviewing nominee arrangements;

transferring customers onto their own Medicare card;

setting up Child Support arrangements, if applicable;

connecting customers with agency social workers for short-term support and intervention; and

providing information, factsheets and a checklist on the agency’s website for customers on how to keep their information safe when leaving a relationship or living with violence or abuse, which has been translated into 30 languages to increase accessibility for culturally and linguistically diverse customers.[85]

5.87Ms Jodie Robinson, General Manager, Child Support and Tailored Services at Services Australia, identified the points of intervention and escalation to specialised teams in relation to child support payments:

When a customer makes contact with child support, for example, we have various points in time where what we call our risk identification and referral model is activated. These are requirements. It’s a question that our staff will ask, and it‘s simply along the lines of, ‘Are you or is anyone else concerned for your safety?‘ If a customer at that point in time indicates yes to that, we have what‘s called a family support team. In the child support space, it means that we will automatically refer customers to that family support team, which is our specialist team within child support for responding to people experiencing family and domestic violence.[86]

5.88More specifically, Ms Robinson emphasised that frontline staff are encouraged to tailor their questions to the circumstances being presented. For example, in a circumstance where a victim-survivor notifies staff that an ex-partner is not meeting their child support obligations:

… staff are equipped to ask that question in a slightly different way: ‘Do you believe he’s deliberately hiding assets? Do you believe he’s deliberately hiding income?’ or anything like that. Then that also will trigger that referral to that same family support team.[87]

5.89The Salvation Army emphasised that Services Australia frontline staff need to be trained and appropriately resourced to respond to individuals who are experiencing abuse, as well as being able to identify signs of financial abuse. Additionally, The Salvation Army emphasised that this includes suitable procedures for ensuring the immediate safety of the community members, and follow-up or referral mechanisms.[88]

5.90The Salvation Army recommended additional training for frontline Services Australia staff to better recognise, respond to and provide support for community members experiencing financial abuse.[89]

5.91Economic Justice Australia highlighted that Centrelink social workers are uniquely equipped to support people with complex needs, including those who have recently experienced family and domestic violence or financial abuse. Social workers are also uniquely equipped to identify and support victim-survivors of financial abuse. However, Economic Justice Australia advised that victim-survivors struggle to access Centrelink social worker support.[90]

5.92Economic Justice Australia recommended the re-establishment of Centrelink office social work units, staffed to respond to local need. This would include additional social workers contactable by phone and face-to-face services.[91]

5.93The Salvation Army also recommended the inclusion of on-site social workers in Centrelink offices to provide further support to both employees and vulnerable customers.[92]

Committee view

5.94The committee is extremely concerned by the evidence received which shows that government services and systems such as child support, Centrelink and the tax system, which are intended to provide essential support and services to Australians, are being widely manipulated and weaponised by perpetrators to commit financial abuse against victim-survivors. In this regard, the committee notes that government services and systems are as vulnerable to misuse by perpetrators of financial abuse as the products and services offered by financial institutions.

5.95The committee therefore considers that consideration should be given to the establishment of a reporting process across government and the financial sector relating to the performance or effectiveness of services and products in relation to financial abuse. Such a process could be an important accountability measure to ensure that the services and products offered by government agencies and financial services are appropriately designed to prevent and address financial abuse appropriately, and to continuously and systematically identify gaps and flaws in products and services that facilitate financial abuse.

5.96That the Australian Government consider the establishment of a reporting process relating to the relative effectiveness of financial products and government services in preventing and addressing financial abuse. This may include a benchmarking process or reporting framework administered by a government agency or through funding provided to an independent non-government organisation or body such as the Australian Banking Association.

Child support

5.97Evidence received by the committee has shown that the child support system is not supporting victim-survivors adequately, and the committee heard strong concerns regarding the proportion of single mothers and children entering poverty as a result of perpetrators manipulating and weaponising the child support system.

5.98The committee notes with great concern that, currently, there is approximately $2 billion in outstanding child support payments, and that so many victim-survivors and their children are not receiving their rightful payments. The committee believes that significant reform is urgently required to address the issue of underpayment and non-payment of child support.

5.99The committee considers that the evidence of widespread under- and non-payment of child support has demonstrated that the child support system currently lacks suitable mechanisms to monitor and enforce child support entitlements. The therefore considers that there would be significant benefit in transferring the responsibility for child support payment collection from Service Australia to the ATO. Moving this responsibility to the ATO would centralise where child support payment information is held, allowing easier enforcement for underpayments and non-payments of child support.

5.100Additionally, the ATO would be better able to coordinate information exchange relating to child support, other government payments and income between Centrelink and other government agencies, which would further assist and support victim-survivors, and more broadly single parents, in relation to social security entitlements and the management and control of their finances more generally.

5.101That the Australian Government make the necessary legislative and regulatory changes to enable the Australian Taxation Office to assume responsibility for government child support collections, replacing the Agency Collect program currently managed by Services Australia.

5.102The committee is particularly concerned about the extent of financial abuse occurring through the private collection of child support. It was brought to the committee’s attention that nearly half of women who ‘choose’ private collection are pressured by their ex-partners to do so, which in many cases leads to no child support being paid at all. The committee believes that requiring both child support payers and payees to make annual declarations of payments made and received under Private Collect arrangements would create a necessary friction point to hold payers more accountable for their requirement to pay child support.

5.103In cases where a declaration in relation to Private Collect child support shows that payments are significantly less than payee child support entitlements, or where an annual payer declaration is not made, Private Collect child support payment arrangements should be automatically converted to an Agency Collect arrangement to allow for greater scrutiny and monitoring of payee child support payments.

5.104The committee believes that annual payer and payee declarations should also be required under Agency Collect arrangements, noting evidence that perpetrators of financial abuse manipulate and delay annual tax return lodgements and information to continue financial abuse and control of victim-survivors, often leading to significant financial difficulty and harm.

5.105The committee believes that requiring such declarations would also address adverse interactions between the Child Support system and the Family Tax Benefit Scheme in which child support payees have previously had tax debts raised against them for child support not actually received.

5.106That the Australian Government mandate annual payer and payee declarations to the Australian Tax Office for individuals in private child support payment arrangements; and require appropriate acquittal documentation, including but not limited to bank statements, to substantiate all declarations.

5.107That, where an annual payer declaration shows that child support payments are not reasonably aligned with payee child support entitlements, or where an annual payer declaration is not made, Private Collect child support payment arrangements automatically convert to Agency (Australian Tax Office) Collect child support arrangements.

5.108As highlighted above, the sheer volume of outstanding child support payments is astonishing and deeply concerns the committee. Evidence received by the committee has shown concerning information about women and children entering hardship due to not receiving child support payments. In addition to general enhancement of regular child support collection to assist payees in receiving payments in full and on time, the committee considers that it is necessary to institute a mechanism via the existing tax system for ensuring that payees are not left out of pocket for non- and under-payment of child support benefits.

5.109 The committee considers that this mechanism could be achieved by issuing child support payees with refundable tax credits equal to any shortfall in child support payments at the end of each financial year, with a corresponding tax debt assigned to the payee, collectable by the ATO as a debt owed to the Commonwealth.

5.110That, at the end of each financial year, the Australian Government provide child support payees with refundable tax credits equal to any shortfall in child support payments for the preceding year; and raise a corresponding tax debt against the relevant child support payer, collectable by the Australian Tax Office as a debt owed to the Commonwealth.

5.111In addition to non-payment of child support, the committee is concerned regarding the way perpetrators can weaponise the current method used to determine child support payments. The use of trusts, partnerships and other mechanisms are being manipulated by perpetrators to underreport income, which negatively impacts the amount of child support victim-survivors are receiving. The committee considers that the enhancement of current mechanism to assess the wealth of payers, as opposed to solely their income, when calculating appropriate child support entitlements would be of great benefit to victim-survivors.

5.112That the Australian Government undertake a review of the formulas used to determine child support payments; and ensure that the review is informed by the lived experience of victim-survivors.

Tax system

5.113The committee heard that, when a perpetrator misuses business structures, such as appointing the victim-survivor as a director of a company without their consent or reporting income distributions to the victim-survivors’ tax file number as a trust beneficiary or as an employee without them actually receiving funds, the victim survivor becomes responsible for unmet tax compliance obligations and unpaid tax debts.

5.114The committee received troubling evidence during the inquiry regarding individual and company tax debts being attributed to victim-survivors when the debt was accrued under coercion or without consent. The committee heard that, by adopting a scheme like the United States’ IRS ‘innocent spouse relief’ scheme, Australia could enable tax redistributions to ensure that tax debts are properly assigned to and paid by the party responsible for debt. The committee sees significant benefits in the establishment of such a scheme in Australia to relieve the burden of debts accrued by victim-survivors as a result of coercion and financial abuse.

5.115The committee is encouraged to see that the Inspector-General of Taxation and Taxation Ombudsman (IGTO) announced in November 2024 that financial abuse in relation to the tax system will be an area of priority review during 2024-25. The committee commends the IGTO for this undertaking as a positive step towards addressing the worrying issues identified during this inquiry. The committee looks forward to considering the outcomes of the review and intends to engage positively with any assistance it can provide the IGTO in undertaking its review.

5.116That the Australian Government develop a tax relief model for victim-survivors of financial abuse similar to the United States IRS ‘innocent spouse relief’ provisions.

5.117Evidence received by the committee has shown that perpetrators are committing financial abuse by making the victim-survivor the co-director or sole director of a company, while denying them any decision-making power and access to financial information. By doing so, perpetrators can protect themselves from bankruptcy by pushing the liability on the victim-survivor. While individuals can submit a defence in relation to disputed directorships, the committee heard that financial abuse, and family and domestic violence more broadly, are not recognised as a basis for accepting that a person was not in fact a director managing a company.

5.118The committee is also concerned in relation to the short 21-day timeframe allowed for a person to rebut a DPN. This is particularly difficult in cases where the receipt of the DPN is the first time a victim-survivor is even made aware of their status as a company director. The committee therefore considers that this timeframe needs to be extended to allow victim-survivors appropriate time to seek advice and submit a defence to a DPN in cases where financial abuse or domestic violence or coercion may be involved.

5.119That the Australian Government amend the Corporations Act 2001 to ensure that the company director provisions appropriately recognise family and domestic violence, including financial abuse, as a reason why a director may be regarded as not in fact managing a company.

5.120That the Australian Government extend the time period allowed to respond to a Director Penalty Notice in cases of reasonable claims of financial abuse.

5.121The committee notes concerns regarding the potential for financial abuse to be perpetrated in connection with the use of trusts. Given the potential for perpetrators to use trusts to facilitate financial abuse and coercive control, the committee considers there is a need to review current legislation and regulatory settings with a view to ensuring that trusts are not able to be used as a mechanism for enabling financial abuse.

5.122That the Australian Government undertake a review of current legislative and regulatory settings relating to trusts, with a view to addressing the abuse and misuse of trusts as a mechanism for financial abuse and coercive control.

Centrelink

5.123The committee acknowledges the important role Centrelink payments provide in supporting Australians, and that Centrelink is intended to provide an important safety-net for victim-survivors escaping violence.

5.124However, the committee notes that Centrelink services could be improved to better support victim-survivors. Amending the Social Security Act 1991 to remove the requirement that victim-survivors have left their home to qualify for crisis support payments would better support victim-survivors by allowing them to stay in their family home. Additionally, the committee sees significant benefits in amending the Act to ensure that victim-survivors are not prevented from accessing a ‘special circumstances’ waiver if a perpetrator has lied to Centrelink without the victim-survivor’s knowledge or consent.

5.125That the Australian Government amend the Social Security Act 1991 to:

remove the requirement that a person has to have left their home to qualify for crisis support payment;

lengthen the time in which a person has to apply for a crisis payment; and

ensure that a victim-survivor is not precluded from accessing a ‘special circumstances’ waiver if a perpetrator lies to Centrelink without the debtor’s knowledge or consent, or the debtor makes a false statement or misrepresentation as a result of coercion or duress by a perpetrator.

Inter-departmental taskforce

5.126Financial abuse is relevant to a wide range of complex and intersecting laws, policies and practices. The committee believes that change cannot be achieved by one department or agency alone, or by amending each relevant act, policy or guideline in isolation.

5.127Evidence received by inquiry participants identified the need for a national taskforce and pointed out that a taskforce would be integral to coordinate and holistically act on the findings of this inquiry. The committee feels that an inter-departmental taskforce would enhance information sharing pathways between government agencies and responding to emergent issues relating to financial abuse and the provision of government services.

5.128The committee was encouraged and impressed by the utility of the safety-by-design principles identified in Chapter 4 and sees significant benefits in applying these principles not only to financial products and services but also government payments and services. The inter-departmental taskforce would be appropriately placed to consider the application of these principles in the government context.

5.129That the Australian Government establish a standing inter-departmental taskforce to oversee the implementation of safety-by-design principles into all government services.

Employee training

5.130The importance of employee training was emphasised to the committee by many inquiry participants, and specifically that government agency frontline employees should be well versed in identifying and responding appropriately to financial abuse. The committee sees significant benefit in mandating financial abuse training and requiring frontline employees to report any suspected financial abuse. The committee believes these initiatives will assist government agencies to identify and appropriately respond to and support victim-survivors of financial abuse.

5.131That all relevant government agencies provide training to frontline staff on the identification of domestic and family violence, including financial abuse, and require mandatory reporting of suspected financial abuse

5.132The committee was encouraged to see the uptake in specialised vulnerability teams within the finance sector and feels that similar teams should be established in government agencies to provide appropriate support to victim-survivors. Individuals engaging with government agencies should be able to request engagement with these specialised teams, and staff members should be able to immediately refer individual cases to such teams without it causing any delay in services provided.

5.133That all relevant government entities providing frontline services establish dedicated teams with specialised training in domestic and family violence, including financial abuse.

Senator Deborah O’Neill

Chair

Labor Senator for New South Wales

Footnotes

[1]Centre for Women’s Economic Safety (CWES), Submission 82, p. 31.

[2]Kay Cook, Adrienne Byrt, Rachael Burgin, Terese Edwards, Ashlea Coen and Georgina Dimopoulos, ‘Financial Abuse: The Weaponisation of Child Support in Australia’, Swinbourne University of Technology and National Council of Single Mothers and their Children, 2023, p. 17, https://doi.org/10.26185/72dy-m137.

[3]Single Mother Families Australia (SMFA), Submission 46, p. 3.

[4]Dr Jennie Gray, Deputy Chair, Women’s Legal Services Australia, Committee Hansard, 28 June 2024, p. 22.

[5]Economic Abuse Reference Group (EARG), Submission 108, p. 50.

[6]Case study provided by Council of Single Mothers and their Children, Submission 59, p. [2].

[7]Parkerville Children and Youth Care, Submission 64, p. 4.

[8]SMFA, Submission 46, p. 1.

[9]Council of Single Mothers and their Children, Child support failure costs children and Budget, Media Release, 18 August 2022, p. 1.

[10]Parkerville Children and Youth Care, Submission 64, pp 4–5.

[11]Parkerville Children and Youth Care, Submission 64, p. 5.

[12]For more information and the committee’s full report: www.aph.gov.au/Parliamentary_Business/Committees/Joint/Family_Law_System

[13]SMFA, Submission 46, p. 8.

[14]Ms Sarah Holman, Community Legal Education and Communications Coordinator, Consumer Credit Legal Service Western Australia, Committee Hansard, 10 July 2024, pp 3–4

[15]Department of Social Services (DSS), Description of Child Support Scheme, 17 August 2024, www.dss.gov.au/families-and-children/programs-services/child-support/the-child-support-scheme#:~:text=Services%20Australia%20assists%20parents%20to,transfer%20of%20child%20support%20payments (accessed 27 November 2024).

[16]Women’s Legal Services Australia, Non-Payment of Child Support as Economic Abuse of Women and Children: A Literature Review, May 2024, p. 31.

[17]Services Australia, Compare your child support collection options, www.servicesaustralia.gov.au/compare-your-child-support-collection-options?context=21911 (accessed 25 November 2024).

[18]Financial Counselling Victoria, Submission 60, p. 10.

[19]SMFA, Answers to questions on notice, 8 November 2024 (received 22 November 2024), p. 2.

[20]SMFA, Answers to questions on notice, 8 November 2024 (received 22 November 2024), p. 2.

[21]Kay Cook, Adrienne Byrt, Terese Edwards, and Ashlea Coen, Opening the black box of child support: Shining a light on how financial abuse is perpetrated, 2024, p. 101.

[22]SMFA, Submission 46, p. 7.

[23]SMFA, Submission 46, p. 7.

[24]Financial Counselling Victoria, Submission 60, p. 10.

[25]SMFA, Submission 46, p. 6.

[26]Brotherhood of St. Laurence, Submission 141, p. [1].

[27]SMFA, Answers to questions on notice, 8 November 2024 (received 22 November 2024), p. 3.

[28]SMFA, Answers to questions on notice, 8 November 2024 (received 22 November 2024), p. 1. Brotherhood of St. Laurence, Submission 141, p. [1].

[29]Mr Benjamin Peoples, Group Manager, Participation and Family Payments, DSS, Committee Hansard, 20 September 2024, p. 12.

[30]Women’s Legal Services Australia, Non-Payment of Child Support as Economic Abuse of Women and Children: A Literature Review, May 2024, p. 30.

[31]CWES, Submission 82, p 32.

[32]Women’s Legal Services Australia, Non-Payment of Child Support as Economic Abuse of Women and Children: A Literature Review, May 2024, p. 9.

[33]CWES, Submission 82, p 32.

[34]Ms Sarah Holman, Community Legal Education and Communications Coordinator, Consumer Credit Legal Service Western Australia, Committee Hansard, 10 July 2024, p. 5.

[35]SMFA, Answers to questions on notice, 8 November 2024 (received 22 November 2024), p. 3.

[36]CWES, Submission 82, p 33.

[37]Ms Terese Edwards, Chief Executive Officer, SMFA, Committee Hansard, 9 July 2024, pp 28–29.

[38]SMFA, Submission 46, p. 2.

[39]CWES, Submission 82, p 33.

[40]EARG, Submission 108, p. 45.

[41]EARG, Submission 108, p. 46.

[42]National Tax Clinic Program, Submission 100, p. 2.

[43]Consumer Action Law Centre, Submission 134, p. 15.

[44]UNSW Tax and Business Advisory Clinic, Submission 9, p. [4].

[45]CWES, Submission 82, p. 34.

[46]National Tax Clinic Program, Submission 100, p. 3.

[47]UNSW Tax and Business Advisory Clinic, Submission 9, p. [5].

[48]ATO, Answers to questions on notice, 15 August 2024 (received 20 September 2024), p. 1.

[49]UNSW Tax and Business Advisory Clinic, Answers to questions on notice, 9 August 2024, (received 5September 2024), p. [2].

[50]Australian Securities and Investment Commission (ASIC), Submission 48, p. 12.

[51]UNSW Tax and Business Advisory Clinic, Answers to questions on notice, 9 August 2024, (received 5September 2024), p. [2].

[52]ASIC, Submission 48, p. 12.

[53]ASIC, Submission 48, pp 11–12.

[54]EARG, Submission 108, p. 30.

[55]UNSW Tax and Business Advisory Clinic, Submission 9, p. [4].

[56]EARG, Submission 108, p. 34.

[57]EARG, Submission 108, p. 46.

[58]National Tax Clinic Program, Submission 100, p. 2.

[59]National Tax Clinic Program, Submission 100, p. 2.

[60]Case study provided by EARG, Submission 108, pp 46–47.

[61]ATO, Trusts, trustees and beneficiaries, 31 January 2024, https://www.ato.gov.au/businesses-and-organisations/trusts/trusts-trustees-and-beneficiaries (accessed 26 November 2024).

[62]ATO, Answers to questions on notice, 30 September 2024 (received 4 November 2024), p. 2.

[63]ATO, Answers to questions on notice, 30 September 2024 (received 4 November 2024), p. 2.

[64]WEstjustice, Submission 113, p. 25.

[65]WEstjustice, Submission 113, p. 29.

[66]Women’s Legal Service Victoria, Submission 131, p. 33.

[67]Women’s Legal Service Victoria, Submission 131, p. 33.

[68]Women’s Legal Service Victoria, Submission 131, p. 30.

[69]Women’s Legal Service Victoria, Submission 131, p. 30.

[70]Women’s Legal Service Victoria, Submission 131, p. 31.

[71]WEstjustice, Submission 113, p. 29.

[72]Services Australia, What Centrepay is, 31 January 2024, https://www.servicesaustralia.gov.au/what-centrepay?context=22366 (accessed 27 November 2024).

[73]Women’s Legal Service Victoria, Submission 131, p. 32.

[74]inTouch, Submission 98, 34.

[75]Women’s Legal Service Victoria, Submission 131, p. 33.

[76]EARG, Submission 108, p. 52.

[77]The Economic Abuse Reference Group Western Australia, Answers to questions on notice, 10 July 2024 (received 7 August 2024), pp [1–2].

[78]EARG, Submission 108, p. 52.

[79]Economic Abuse Reference Group Western Australia, Submission 114, p. 4.

[80]Australian Banking Association, Answers to questions on notice, 8 July 2024 (received 12August2024), p. 16.

[81]SMFA, Submission 46, p. 7.

[82]Ms Anita Challen, Assistant Commissioner, Frontline Risk and Strategy, ATO, Committee Hansard, 15 August 2024, p. 9.

[83]DSS and Services Australia, Submission 89, p. 9.

[84]DSS and Services Australia, Submission 89, p. 9.

[85]DSS and Services Australia, Submission 89, pp 9–10.

[86]Ms Jodie Robinson, General Manager, Child Support and Tailored Services, Services Australia, Committee Hansard, 20 September 2024, p. 13.

[87]Ms Jodie Robinson, General Manager, Child Support and Tailored Services, Services Australia, Committee Hansard, 20 September 2024, p. 13.

[88]The Salvation Army, Submission 34, p. 31.

[89]The Salvation Army, Submission 34, p. 32.

[90]Economic Justice Australia, Submission 71, p. 6.

[91]Economic Justice Australia, Submission 71, p. 7.

[92]The Salvation Army, Submission 34, p. 32.