Perpetrators of financial abuse who use the tax and social security systems to create debts as a form of coercive control could soon be held liable.
The federal government today announced consultation over whether courts should be given greater flexibility to transfer a tax or social security debt to the spouse responsible for financial abuse in family law proceedings.
ABC News last month flagged that Assistant Treasurer Daniel Mulino was taking a range of steps to combat financial abuse.
"Financial abuse is often one part of a broader pattern of coercion, control and abuse designed to remove a person's independence and limit their choices," Mr Mulino said.
He said the effects could follow victim-survivors for years after a relationship ended, through debts, financial insecurity and lost opportunities.
"We have a responsibility to ensure our financial systems cannot be used as a tool for abuse, and that victim-survivors receive the support they need to rebuild their lives,"
Mr Mulino said.
The reforms form part of the federal government's response to the Parliamentary Joint Committee (PJC) inquiry into financial abuse.
Reforms to stop death benefit payouts and super rollovers
Other reforms announced include preventing perpetrators of family and domestic violence from receiving victims' superannuation death benefits, with draft legislation to be released later this year.
The government also wants to stop coerced directorships, including providing protections for victim‑survivors pressured into company directorships and associated liabilities.
Daniel Mulino says he wants to stop financial abuse through the tax and super systems. (ABC News: Stuart Carnegie)
Mr Mulino said draft legislation would be released for consultation later this year and supported by the Australian Taxation Office (ATO).
The government would also give the ATO powers to prevent rollovers into newly established self‑managed super funds, where there are concerns of fraud, financial abuse, misconduct, or potential consumer harm.
ASFA chief policy and advocacy officer James Koval said currently a super fund may be legally obligated to pay a member's death benefit to a person who perpetrated family and domestic violence against that member.
He welcomed moves to end it as well as stop rollovers of super in cases of abuse.
"Once money leaves the safety of larger institutional super funds and moves into a self-managed fund, it can be very difficult to recover," he said.
"Giving the tax office the power to stop a super withdrawal in its tracks while it investigates suspected financial abuse or crime is a sensible safeguard."
Super Consumers Australia's director of advocacy Lily Jiang said the announcement was a positive step towards addressing the devastating impacts of financial abuse.
"We need to address the risks built into the system, identify abuse before people's savings are transferred, and make sure the professionals people rely on aren't enabling that abuse," she said.
Lily Jiang wants professionals who facilitate abuse to be held accountable. (ABC News: John Gunn)
One in six women impacted
Mr Mulino said the government would invest more than $180 million to reform the child support system and close loopholes that facilitated financial abuse and coercive behaviour, including through legislation it introduced in September.
It would also expand Services Australia's powers to waive social security debts incurred as a result of family and domestic violence.
Ann Kayis-Kumar, the founding director of UNSW's tax and business advisory clinic, noted one in six women and one in 13 men were impacted by "this insidious form of abuse" and hoped the law changes would soon be implemented.
She has long been calling for the ATO to waive debts in cases of financial abuse.
Ann Kayis-Kumar wants to see the ATO waive debts in cases of financial abuse. (ABC News: Scot Preston)
Lody Stewart from Redfern Legal Centre's Financial Abuse Service called for increased funding for frontline services.
"Access to specialist economic and financial abuse support remains a postcode lottery,"
she said.
Financial counsellor Julie Dal Pra said they supported victim-survivors who had been coerced into directorships, held liable for business debts that were not theirs, and left to spend years untangling the financial consequences of abuse.
"Coordinated action across government, industry and regulators must be backed by properly funded specialist community services and stronger accountability for perpetrators," she said.
Julie Dal Pra supports victim-survivors who have been coerced into directorships. (ABC News: Billy Draper)
The Centre for Women's Economic Safety (CWES) CEO Rebecca Glenn welcomed the reforms but called for a formal mechanism to ensure victim-survivors of financial abuse had a say in final reforms.
"Their lived experience must be central to implementation if these reforms are to achieve their intended outcomes," Ms Glenn said.