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Tax - Are you being abused? · The Money Puzzle

0:10
Speaker 1: Hello and welcome to the Australian's Money Puzzle podcast. I'm
0:13
Speaker 1: James Kirby. Welcome aboard everybody. It's amazing how one thing
0:17
Speaker 1: leads to another. Our last episode a very interesting chat
0:21
Speaker 1: you might recall with Nathan Fradley. He was a financial advisor,
0:25
Speaker 1: but he's also a specialist in divorce. If you miss
0:28
Speaker 1: that episode, catch up because it's very good. It's about
0:30
Speaker 1: how to divorce, the best way forward for both parties
0:34
Speaker 1: in a divorce from a financial perspective. But a key
0:38
Speaker 1: issue that emerged in that podcast was this concept of
0:42
Speaker 1: financial abuse right very typically, For instance, in some divorce situations,
0:49
Speaker 1: people will hide money. They may hide money in conventional
0:51
Speaker 1: bank accounts. More recently they may hide money in crypto.
0:56
Speaker 1: There's issues off often and always, of course, around property.
1:00
Speaker 1: What's the best way to settle property? Not necessarily the
1:04
Speaker 1: best thing to get the house. You would have thought
1:05
Speaker 1: that would be automatically the case. Not so, says Nathan.
1:09
Speaker 1: Also an issue that came up in that show was
1:12
Speaker 1: people signing documents that they fail to understand, or perhaps
1:15
Speaker 1: more typically, signing documents without inquiring what exactly the document entailed.
1:22
Speaker 1: And this is why we so often see people left
1:24
Speaker 1: high and dry by their partners, sometimes by their business partners.
1:30
Speaker 1: My guest today is Anna cas Kumar, and she runs
1:35
Speaker 1: the Tax Clinic tax and Business Advisory Clinic, which, if
1:39
Speaker 1: you don't know what it is, it's an interesting Can
1:43
Speaker 1: I call it an experiment? She'll tell me in a moment.
1:45
Speaker 1: At the University of News that way is. Anna is
1:48
Speaker 1: an associate professor there. How are you Anna?
1:50
Speaker 2: Thank you so much for han me James, thank you,
1:53
Speaker 2: And I think you have described it quite well. It's
1:54
Speaker 2: very much an experimental design from a research and community
2:00
Speaker 2: service perspective.
2:02
Speaker 1: And I've bed several mistakes already, called you Anna, collection,
2:04
Speaker 1: called you Anne, didn't check how I pronounced your surname properly?
2:07
Speaker 1: How do I pronounce it?
2:09
Speaker 2: You're so kind? It's chaos kuma ks kuma.
2:11
Speaker 1: Okay. So the tax Clinic, it sounds awfully interesting. We
2:16
Speaker 1: all could use it, I'm sure, But tell me how
2:20
Speaker 1: long you've been going and precisely what your product proposal
2:26
Speaker 1: is and to whom.
2:27
Speaker 2: Yes, thank you for that. So we've started since twenty
2:30
Speaker 2: nineteen helping people who are in severe of financial distress. So,
2:35
Speaker 2: like you've mentioned in the past, with your guests, including
2:37
Speaker 2: financial counselors. That cohort is the cohort that we serve,
2:42
Speaker 2: and we've been doing that since our inception about five
2:45
Speaker 2: six years ago. We also help people who've come to
2:49
Speaker 2: us from other referral channels from the community sector, including
2:53
Speaker 2: domestic violence Support Services Lifeline, and that really gives us
2:59
Speaker 2: a unique window into a cohort that is falling through
3:04
Speaker 2: the cracks.
3:05
Speaker 1: And I'm going to guess now, but this isn't the
3:10
Speaker 1: typical customer at a financial counselor's door. It's probably a
3:16
Speaker 1: bit more complicated. I expect it's probably people who had
3:20
Speaker 1: to go at a business in one way or another.
3:22
Speaker 1: Is that? Could you tell us a little bit more
3:24
Speaker 1: about the people on your books?
3:26
Speaker 2: Basically, that's absolutely right. So most of our clients are
3:30
Speaker 2: small business, particularly the micro business end of small business,
3:34
Speaker 2: and that's why they come to us often with quite
3:37
Speaker 2: substantial tax debts and long term tax returns and bus
3:44
Speaker 2: returns that have not been completed. As you can imagine
3:48
Speaker 2: your listeners can imagine, We know that a lot of
3:51
Speaker 2: new businesses struggle to survive past five year mark, and unfortunately,
3:56
Speaker 2: with our client base. To give your listeners a bit
3:59
Speaker 2: of context. On average, our outstanding tax debt amount is
4:04
Speaker 2: over eighty thousand dollars, so that's just tax debt, so
4:08
Speaker 2: that's not other debts as well. And then on average
4:11
Speaker 2: over seven years of outstanding income tax returns and over
4:15
Speaker 2: five years of outstanding bas so for bas per year,
4:19
Speaker 2: that's a lot of tax compliance that has fallen by
4:23
Speaker 2: the wayside for a number of reasons, including mental health,
4:27
Speaker 2: domestic violence, all the compounding factors and structural challenges that
4:32
Speaker 2: small business can face.
4:34
Speaker 1: How do you select? How do I how do you select?
4:36
Speaker 1: You get ten pieces of correspondence every morning telling people
4:40
Speaker 1: on people saying I'm at terrible state, I don't know
4:42
Speaker 1: where to go. How do you do it? How do
4:43
Speaker 1: you select?
4:44
Speaker 2: We trianage by reference to urgency, for example, if the
4:49
Speaker 2: and also the sense of working in true partnership with
4:53
Speaker 2: our referral partners. And we've been doing that since that week,
4:56
Speaker 2: since we started. And so where for example, financial b
5:00
Speaker 2: service new Softwores, which is a state run financial abuse service,
5:03
Speaker 2: comes to us and says, we have a client here
5:05
Speaker 2: who has a director penalty notice at DPN that gives
5:08
Speaker 2: the taxpayer twenty one days to pay the full amount
5:11
Speaker 2: of the company liability that obviously gets triaged, escalated and prioritized,
5:17
Speaker 2: but also the taxpayer has received urgent escalation letters from
5:21
Speaker 2: the tax office that we know then that can lead
5:24
Speaker 2: to firm action within triage and prioritize service.
5:28
Speaker 1: Are you rushing to save these people from bankruptcy? Is
5:31
Speaker 1: that what it comes to?
5:33
Speaker 2: Really, I'm glad that you asked that, because bankruptcy is
5:36
Speaker 2: one of the risks that our clients are facing into,
5:40
Speaker 2: and that can be appropriate in some circumstances, but particularly
5:44
Speaker 2: in the situations that our clients find themselves in, it
5:49
Speaker 2: can have really perverse knock on effects. For example, you
5:53
Speaker 2: mentioned financial abuse being one of the issues, and it's
5:56
Speaker 2: certainly a hot topic of the moment. Really grateful that
5:59
Speaker 2: both sides politics of bipartisan support for reforming the weaponization
6:04
Speaker 2: the tax system by perpetrators into a partner violence. What
6:08
Speaker 2: we're seeing is if the debts have been deliberately put
6:13
Speaker 2: in the victim survivor's name as a further tactic of
6:18
Speaker 2: financial abuse, then steamrolling into bankruptcy is the last thing
6:24
Speaker 2: that person needs that might fall into because of a
6:27
Speaker 2: lack of advice and support. That's really got awful short
6:32
Speaker 2: term and medium long term consequences, including, for example, losing
6:38
Speaker 2: standing and family court, which can result in that person
6:41
Speaker 2: losing child customer.
6:42
Speaker 1: Yeah right, I had never actually extrapolated to that degree.
6:45
Speaker 1: Tell me, while we're talking in the show about divorce,
6:48
Speaker 1: one of the things that came up clearly was that Laura,
6:52
Speaker 1: ultimately this comes under the umbrella of financial literacy. And
6:56
Speaker 1: I'm on the board of EXTRA, the Financial Literacy Foundation,
6:59
Speaker 1: and we've had the We've represented EXTRA on the show
7:02
Speaker 1: many times because I think financial literacy is terribly important
7:07
Speaker 1: the people that come to your door. I know that
7:11
Speaker 1: invariably there's a traumatic backdop over and above standard business stresses.
7:19
Speaker 1: But how important is that financial literacy? Is it that
7:23
Speaker 1: people didn't understand the documents they were signing, the notices
7:28
Speaker 1: from the tax office, that they didn't understand the severity
7:31
Speaker 1: of them. Is that an aspect of it.
7:34
Speaker 2: That's certainly one of the factors that we see. And
7:37
Speaker 2: of course you've anticipated there's a spectrum of different circumstances
7:42
Speaker 2: that someone can come to our clinic having experienced on
7:46
Speaker 2: one had financial literacy is one of the threads that
7:49
Speaker 2: connects all of our clients. But just because someone has
7:54
Speaker 2: a higher sense of financial literacy, it doesn't make them
7:57
Speaker 2: immune to financial abuse. And that's the really insidious part
8:03
Speaker 2: of it. We see people who have held really technical positions,
8:08
Speaker 2: CEOs of companies, medical professionals who have fallen victim to
8:14
Speaker 2: financial abuse, and so that's one of the really challenging
8:17
Speaker 2: pieces around identifying those particular.
8:20
Speaker 1: When you sit across those people, you know that they
8:23
Speaker 1: are competent, they are credentialed in some area. So what
8:29
Speaker 1: happened that led to them being in your office.
8:33
Speaker 2: In circumstances of financial control? In particular, there is and
8:39
Speaker 2: this is an area of literature that is well beyond
8:42
Speaker 2: my core expertise. But what we do know is that
8:46
Speaker 2: one of the dynamics at play is power and control.
8:51
Speaker 2: And your listeners might be aware of the term coercive control.
8:55
Speaker 2: So a sense of that power dynamic, which to an
8:59
Speaker 2: extent would stem from social norms, something as innocent as
9:05
Speaker 2: saying I'll run the business. All you need to do
9:07
Speaker 2: is sign XYZ doctor let me look after it. And
9:11
Speaker 2: it does present a bit of a slippery slope. And
9:14
Speaker 2: really something distressed as well with your listeners is this
9:17
Speaker 2: is a relatively small cohort. So we know that it
9:20
Speaker 2: affects sixteen percent of Australian women and eight percent of
9:24
Speaker 2: Australian men according to ABS data from about four years ago.
9:28
Speaker 2: But that is a significant cohort. When you add it all,
9:31
Speaker 2: we're talking two point four million Australians.
9:34
Speaker 1: Okay, and it's twice put very wrong numbers on it.
9:38
Speaker 1: The issue is twice as prevalent among women than.
9:41
Speaker 2: Men statistically speaking.
9:44
Speaker 1: Yes, okay, very very interesting. I've got to hold it
9:47
Speaker 1: right there. We're going to take a break and we're
9:48
Speaker 1: going to come back and do a closer dive on
9:50
Speaker 1: this back in a moment. Talks. Hello, Welcome back to
10:05
Speaker 1: The Australian's Money Puzzle podcast. I'm James Kirby from The
10:09
Speaker 1: Australian and I am talking to an kus Kumar from
10:14
Speaker 1: the Tax Clinic. The Tax Clinic is at the University
10:17
Speaker 1: of New South Wales and it's Newish. It's not perhaps
10:22
Speaker 1: very well known in the broader investment audience, but they're
10:24
Speaker 1: doing some fascinating work and I think it gives us
10:26
Speaker 1: a really interesting insight into the world. We talk on
10:31
Speaker 1: the show mostly about how to understand investing and how
10:36
Speaker 1: to succeed in investing. Not everybody does just, and businesses
10:41
Speaker 1: roll over, and investors get into all sorts of trouble,
10:43
Speaker 1: and people at all levers get into all sorts of
10:45
Speaker 1: trouble financially. And there is if you can't pay for
10:49
Speaker 1: a financial advisor being five five hundred a year, it's
10:55
Speaker 1: after that where do you go. There's financial counselors, but
10:57
Speaker 1: they really only want to deal with people who are
11:00
Speaker 1: are in desperate straits and difficulties financially. What about people
11:06
Speaker 1: who had a business who were making a goal of
11:08
Speaker 1: things and it went after rails And this is the
11:09
Speaker 1: sort of layer and if I'm if I've got it right,
11:12
Speaker 1: this is the layer of where you come in. Can
11:14
Speaker 1: you tell me what rule has divorce got in your files?
11:17
Speaker 1: If you like?
11:19
Speaker 2: We definitely find that amongst our coport of clients, the
11:23
Speaker 2: incidence of financial abuse is a very strong undercurrent, and
11:29
Speaker 2: from the literature we also know that is quite common
11:32
Speaker 2: as a post separation event. So with all of the
11:37
Speaker 2: other forms of abuse increasingly falling out of reach of perpetrators,
11:42
Speaker 2: financial abuse often rams up, or even if there was
11:45
Speaker 2: no domestic violence, the opportunity for financial abuse post separation
11:50
Speaker 2: then presents a catalyst for that following a brilliant breakdown.
11:55
Speaker 1: Yes, of course, is it new. It's just we call
11:57
Speaker 1: the financial abuse. But is it new? Is there anything
11:59
Speaker 1: change interested there from? Has it always been there? Are
12:03
Speaker 1: there particular trends that are new and so more urgent.
12:11
Speaker 2: There's definitely been an increased awareness over the last few
12:14
Speaker 2: decades the financial abuse is a subset of domestic violence,
12:19
Speaker 2: but in terms of the overall public perception that is
12:25
Speaker 2: still in progress. In terms of shifting the dial awareness
12:29
Speaker 2: an understanding that domestic violence isn't just the physical forms
12:33
Speaker 2: but very much the financial forms, and quite chillingly, typically
12:38
Speaker 2: it takes a bignoms survivor about seven attempts to escape
12:42
Speaker 2: a relationship, and it's a lack of economic security, financial
12:46
Speaker 2: security that can draw them back to a perpetrator.
12:50
Speaker 1: Yes, yeah, and what are the flash points? Obviously one
12:53
Speaker 1: is separation and post separation, but generally a got are
12:57
Speaker 1: the flash points for you in this area?
13:02
Speaker 2: That's certainly the situation that we see with our client base.
13:06
Speaker 2: From the literature more broadly, we know that key milestones
13:10
Speaker 2: like having a child are also one of those circumstances,
13:14
Speaker 2: and that goes back to the dynamic of power and control.
13:18
Speaker 1: What about when businesses go sour.
13:22
Speaker 2: The business and relationship breakdown unfortunately, of both markers of
13:26
Speaker 2: financial vulnerability and financial distress. And when we zoom out
13:32
Speaker 2: and look at the other literatures beyond the tax space,
13:35
Speaker 2: which is my Baily wig. But in conversations that I've
13:37
Speaker 2: had with researchers in the medical space, for example, in
13:41
Speaker 2: mental health research, it's quite well established that financial distress
13:47
Speaker 2: and mental health go hand in hand. And similarly in
13:50
Speaker 2: the gender space or the gender violence space, financial distress
13:55
Speaker 2: and financial abuse go hand in hand. There's a bit
13:59
Speaker 2: of a vendor diagram here where they all intersect.
14:03
Speaker 1: Is there any evidence that financial success and financial wellbeing
14:08
Speaker 1: go hand in hand?
14:10
Speaker 2: That's a great question. Financial well being is certainly an
14:14
Speaker 2: area that is looked at in the banks have done
14:16
Speaker 2: some amazing work in the center of social impact to
14:19
Speaker 2: one of the it's complicated to define, but one of
14:22
Speaker 2: the pieces is around a social capital piece that goes
14:26
Speaker 2: to that point. I think you're raising as well, James.
14:28
Speaker 2: But it's certainly a complicated space when you look at
14:30
Speaker 2: the opposite end of the spectrum with financial vulnerability and
14:33
Speaker 2: all the things that can be indicators of a lack
14:36
Speaker 2: of financial wellbeing.
14:39
Speaker 1: Can I ask you just in the area of taxes,
14:42
Speaker 1: it is a tax cliniqic it be worth people, it
14:44
Speaker 1: would be worth knowing. And this is just strictly an
14:46
Speaker 1: academic question as such in our tax system. A lot
14:49
Speaker 1: of people on the show when they complain about the
14:51
Speaker 1: fact that you must just if you get a tax
14:54
Speaker 1: bill for whatever reason, like you must establish so it
14:59
Speaker 1: get a bill for ten thousands and you say that
15:00
Speaker 1: it shouldn't be ten thousand, it should be eight thousand,
15:03
Speaker 1: but you must establish why it's not ten thousands. Is
15:05
Speaker 1: that typical all around the world. People don't necessarily know
15:08
Speaker 1: is that Western convention in.
15:10
Speaker 2: Tax And that goes to a really interesting point, James,
15:14
Speaker 2: and something that leads to a question around broader tax
15:17
Speaker 2: payer rides. So we know in Australia, like you said,
15:20
Speaker 2: we have effectively both a self assessment scheme over the
15:24
Speaker 2: last couple of decades and a reverse onus of proof.
15:28
Speaker 1: Yes, reverse owners of proof. That's it, Yeah, beautifully put
15:31
Speaker 1: academically sweetly termed yeah, reverse owners of proof, which would
15:36
Speaker 1: be described in more furious terms by some people.
15:39
Speaker 2: But yeah, okay, indeed, indeed and this is something that
15:42
Speaker 2: is a real challenge.
15:44
Speaker 1: But is it a global standard? Is that how it
15:47
Speaker 1: works everywhere? Ah?
15:49
Speaker 2: Well, we do know that the back in nineteen ninety
15:53
Speaker 2: three there was a recommendation to reform that by government agency,
15:58
Speaker 2: the Joint Commity of Public Accounts, And so this is
16:01
Speaker 2: something that has been contested on and off since ninety three,
16:05
Speaker 2: and it's something that is not necessarily Every system has
16:09
Speaker 2: its own nuances and quirks. Where the rubber hits the
16:13
Speaker 2: road is of course, in disputes, like you say, and
16:17
Speaker 2: we don't have all of the mechanisms available compared to
16:21
Speaker 2: some other jurisdictions like the US, but of course they
16:24
Speaker 2: in turn have their own quirks. We do have a
16:27
Speaker 2: taxpayer name died, we do have a taxpayer charter, but
16:32
Speaker 2: we don't have a taxpayer bill of rights. So across
16:35
Speaker 2: the patchwork we have a system where we know that
16:38
Speaker 2: there is rule of law and there are tax dispute
16:41
Speaker 2: resolution mechanisms. But in terms of the burden on taxpayers,
16:48
Speaker 2: it is well established that disproportionately affects the lower end
16:53
Speaker 2: of the tax paying spectrum because it's nearly impossible to
16:55
Speaker 2: navigate all of this complexity without is that right?
17:00
Speaker 1: Even know that? Okay? And in terms of from again,
17:03
Speaker 1: many of our listeners have self managed super funds when
17:07
Speaker 1: I'm guessing again, but I imagine the hotspot for you is couples.
17:11
Speaker 1: You see, you pass a restaurant, there was a couple
17:13
Speaker 1: in the restaurant. They seem to be going great. Next
17:15
Speaker 1: thing you find out the businesses for sale. The couple
17:17
Speaker 1: have broke up, the business has broken up. Often in
17:21
Speaker 1: those cases there's also self managed super fund complications because
17:24
Speaker 1: the self managed super funds which they both had owned
17:26
Speaker 1: the business or owned the business premises or whatever. The
17:30
Speaker 1: SMSF brigade as such, where where do they go? Can
17:34
Speaker 1: you deal with them?
17:36
Speaker 2: There is a real risk of people in those situations
17:39
Speaker 2: falling through the cracks because our service doesn't have enough
17:43
Speaker 2: resourcing to meet all of the unmet need unfortunately. But
17:48
Speaker 2: we are growing trend in the Australian landscape them Like
17:51
Speaker 2: you said, James, we're relatively new across Australia. There's to
17:55
Speaker 2: both side of politics, credit and growing awareness and understanding
17:59
Speaker 2: that this scheme needs to be further supported. To the
18:02
Speaker 2: National Tax Clinics program has about twenty tax clinics Australia wide.
18:08
Speaker 2: But we really do need to have more funding so
18:10
Speaker 2: that we can support a broader pool of people who
18:13
Speaker 2: are all falling through the cracks, because, like you've said,
18:16
Speaker 2: without the professional advice that you need to navigate complexity,
18:20
Speaker 2: it's nearly impossible to do so.
18:22
Speaker 1: Okay, So tell me from your experience so far in
18:25
Speaker 1: this very interesting sort of coningage area. Really i'm sure academically,
18:30
Speaker 1: what are your lessons that you would give to listeners
18:34
Speaker 1: that they don't end up sitting opposite you in your clinic.
18:41
Speaker 2: There's three key things. One is, where possible, making sure
18:48
Speaker 2: that cash flow is managed in a way that is
18:52
Speaker 2: mindful of tax compliance obligations, because that's one of the
18:55
Speaker 2: pitfalls that we do see, and that's easier said than done.
18:58
Speaker 1: They just keep pushing the tax dimension away.
19:01
Speaker 2: And that goes to financial literacy and tax literacy like
19:05
Speaker 2: you were saying before, but of course easier to bean
19:07
Speaker 2: done where there are cash flow struggles. Then quarantining off
19:10
Speaker 2: the GST is obviously a challenge. The second when it
19:16
Speaker 2: comes to financial abuse, is being able to recognize the science,
19:22
Speaker 2: not necessarily in your clients, but just more broadly as well.
19:27
Speaker 2: So there are five key telltale signs or red flags
19:31
Speaker 2: of financial abuse, particularly in tax situations. So one is
19:36
Speaker 2: controlling access to money, so restricting access to bank accounts,
19:40
Speaker 2: business income tax information. The second is hiding money, so
19:45
Speaker 2: keeping finances secret and hiding income and assets. The third
19:49
Speaker 2: is shifting debts, and we see that financial counselors have
19:53
Speaker 2: been identifying that for a while. Now they call it
19:55
Speaker 2: sexually transmitted debt. We've also identified a subcohoro sexually transmitted
20:01
Speaker 2: tax stets. So that's the situations like the dPNs for example,
20:05
Speaker 2: or taking out loans in the other person's name.
20:07
Speaker 1: What the dPNs, you might explain what that means? What
20:09
Speaker 1: do you mean? Oh?
20:10
Speaker 2: Yes, So dPNs is the director penalty notices. It's those
20:13
Speaker 2: situations where the company liability goes to the director and
20:16
Speaker 2: where we have a sole director situation with a biglim survivor,
20:19
Speaker 2: with the perpetrator being the shadow director. That then means
20:23
Speaker 2: that the ATO by default has to go after the
20:26
Speaker 2: one early director and.
20:27
Speaker 1: This would be a hotspot where people signed something and
20:30
Speaker 1: didn't realize what they were signing precisely.
20:34
Speaker 2: And then fourth is making decisions, making financial decisions for
20:38
Speaker 2: that other person, restricting their visibility around access to money
20:43
Speaker 2: decision making. And then finally, the fifth one is having
20:45
Speaker 2: inaccessible information, so business structures or financial arrangements the block
20:51
Speaker 2: access to money.
20:53
Speaker 1: Right, Okay, how's the arrival of cryptocurrency made this worse
20:59
Speaker 1: or easier for the perpetuator.
21:02
Speaker 2: We haven't identified crypto specifically as a mechanism, but what
21:07
Speaker 2: we do know is that business is the strong thread
21:11
Speaker 2: through all of our matters where there is a financial
21:14
Speaker 2: abuse element, and unfortunately that number itself has been growing.
21:17
Speaker 2: So when we first started the clinic, it was about
21:19
Speaker 2: sixty percent of our female clients self reporting financial abuse
21:24
Speaker 2: and that was on trend year on year up until
21:26
Speaker 2: last year where it ballooned to over eighty percent and
21:29
Speaker 2: it's been at that level for the last two years.
21:33
Speaker 1: Is that Does that imply that the majority of the
21:35
Speaker 1: victims in these scenarios are female?
21:40
Speaker 2: Yes? Absolutely. What we see with our cohort is an
21:44
Speaker 2: overrepresentation of women.
21:47
Speaker 1: And is it getting better or worse over the last
21:50
Speaker 1: two years?
21:51
Speaker 2: It has been markedly worse, even though our client intake
21:56
Speaker 2: mechanism hasn't changed dramatically.
22:00
Speaker 1: And you're convinced that it has got worse rather than
22:03
Speaker 1: the reporting has changed.
22:05
Speaker 2: Because we used an internationally recognized screening scale rather than
22:10
Speaker 2: just ask a yes no question, I am confident, so
22:12
Speaker 2: we use the scale that I Can't Abuse Too, which
22:15
Speaker 2: asks over a dozen questions that are more broad and
22:18
Speaker 2: so it doesn't rely on awareness of the respondent to
22:23
Speaker 2: the survey question.
22:24
Speaker 1: Yeah, okay, very good. We'll be back in a moment.
22:27
Speaker 1: Folk curated once more for and some issues that have
22:31
Speaker 1: come up on the show and a very interesting question
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Speaker 1: from d Back in a moment. Hello, Welcome back to
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Speaker 1: the Australians Money Puzzled podcast. James Kirby here with Ann
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Speaker 1: ks Kumar from the Tax Clinic at the University of
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Speaker 1: New South Wales, which is a specialist unit dealing with
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Speaker 1: people who have complex tax problems where there has been
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Speaker 1: financial abuse. Is that almost that's mandatory? Is it that
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Speaker 1: you must prove the abuse? I expect you must before
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Speaker 1: you will deal with a client.
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Speaker 2: That's such a great question because the of an injury
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Speaker 2: burden is a challenge that the ATO is facing into
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Speaker 2: now following the Tax Ombosman's recommendations. So we ran an
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Speaker 2: investigation of financial abuse and the tax system and made
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Speaker 2: some recommendations for both administrative and legislative reform. When it
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Speaker 2: comes to proving abuse, what we do is rely on
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Speaker 2: the experts rather than us trying to become a master
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Speaker 2: of all. We just focus on the tax space and
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Speaker 2: rely on the community expertise from financial abuse services and
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Speaker 2: domestic violence support services to do that triaging for us
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Speaker 2: in the majority instances.
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Speaker 1: So no one comes to you directly. They are referred.
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Speaker 2: We used to when we first started, a combination of
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Speaker 2: referrals from financial counselors and people who just found out
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Speaker 2: about us. But we have found that because we want
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Speaker 2: to only help the people who are in most need,
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Speaker 2: mindful that a lot of people might be struggling financially
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Speaker 2: but can still afford to pay for tax advice, we
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Speaker 2: don't want to be in that space where we even
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Speaker 2: risk having the optics of cannibalizing the profession, and so.
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Speaker 1: We are serving the wrong people over people who were
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Speaker 1: more deserving. Precisely, it's all pro bono, I imagine. Yes, yes, okay,
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Speaker 1: very interesting, All right, now, I had a couple of issues,
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Speaker 1: but I've kept one really interesting question, and I had
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Speaker 1: been wondering how I would deal with this, who would
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Speaker 1: answer it? But you've come along so as perfect it's
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Speaker 1: from d I just read it. Many women who have
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Speaker 1: secondary who have been secondary credit cardholders on their partners account,
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Speaker 1: whether due to traditional household rules or lower income, find
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Speaker 1: themselves in a difficult financial position, whether their partner passes
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Speaker 1: away or our relationship ends. Despite years of responsible use,
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Speaker 1: they often struggle to obtain a credit card in their
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Speaker 1: own name because they have not built an independent credit history.
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Speaker 1: The issue particularly impacts older women, homemakers, and those who
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Speaker 1: work part time. Banks often do not recognize secondary card
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Speaker 1: holders as having a financial track record, leaving these people
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Speaker 1: financially vulnerable. Would you consider covering this, Yes, we're going
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Speaker 1: to cover it right now. So this is an issue
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Speaker 1: that how does it work if you have you get
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Speaker 1: a credit card as a couple and one's a secondary holders,
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Speaker 1: so you don't exist as far as the bank concern
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Speaker 1: is that it.
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Speaker 2: What we've done from our conversations with clients and community
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Speaker 2: support services is that the primary secondary card holder piece
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Speaker 2: can be quite challenging to unpick, and that's one of
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Speaker 2: the reasons why a lot of experts in this space
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Speaker 2: suggest separate bank accounts and also shared if that is
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Speaker 2: what works for that particular couple, but certainly having separate
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Speaker 2: bank accounts is often noted as one of the strategies
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Speaker 2: that can be adopted more broadly, not just for the
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Speaker 2: track record form a credit history perspective, but just from
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Speaker 2: a control and access to money considering.
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Speaker 1: It's just the basic fundamental independence of it.
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Speaker 2: Yes, and that's not to say that's the silver believe,
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Speaker 2: but that is what is typically suggested.
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Speaker 1: Yes, and without that, it is the case that if
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Speaker 1: you're a second credit card holder, even for years and years,
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Speaker 1: you don't have a credit history. So you walk into
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Speaker 1: the bank after twenty five years where your partner was
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Speaker 1: the primary card holder, and you say to the bank,
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Speaker 1: I want my own credit card and they say, we
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Speaker 1: don't know who you are. We have no credit history
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Speaker 1: of you.
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Speaker 2: And while we haven't had as much bank king sector
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Speaker 2: related issues to manage because we only deal with the
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Speaker 2: tax piece, one of the things that Australian banks ought
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Speaker 2: to be very proud of is that we are global
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Speaker 2: leaders in the last four to five years, especially around
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Speaker 2: kind understanding of financial abuse, and so hopefully there might
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Speaker 2: be more opportunities for change in that space as well,
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Speaker 2: because the banking sector is quite ahead of the game.
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Speaker 2: When it comes to its approach to identify and supporting
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Speaker 2: people experiencing financial abuse.
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Speaker 1: Okay, very good, I see. So tell me if you
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Speaker 1: could wave a magic wand and there was one thing
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Speaker 1: your clinic and all the clinics around the country and
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Speaker 1: there obviously sounds something of a loose collection at the moment,
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Speaker 1: but if there was one thing that you'd like to
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Speaker 1: see happen, what would it be?
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Speaker 2: Oh? I love the idea of being able to waive
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Speaker 2: a magic Wand how expansive can we get here? We're
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Speaker 2: very close to getting law reform, which hopefully won't even
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Speaker 2: require a magic one because of the bipartisan support to
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Speaker 2: change the tax laws around the weaponization of the tax system.
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Speaker 2: More broadly, what I would love to see is more
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Speaker 2: awareness around tax literacy, more understanding that once you get
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Speaker 2: an ABN, that comes with the knock on effect of
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Speaker 2: tax related compliance obligations, so that ideally we don't have
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Speaker 2: anyone needing.
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Speaker 1: Clinics like that don't really tell you what I can
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Speaker 1: get an ABN in two seconds. It doesn't They don't
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Speaker 1: really tell you. It's not really written a black and
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Speaker 1: white across the top. The obligations of that is.
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Speaker 2: It exactly, and then the first time you might have
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Speaker 2: a touch point might be eighteen months down the track
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Speaker 2: and you may not have realized that there are all
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Speaker 2: of these tax compliance obligations.
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Speaker 1: And just on that national law reform around abuse. If
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Speaker 1: it all comes to pass and falls into place, what
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Speaker 1: would happen that is not happening now A.
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Speaker 2: Number of things. So, like we're talking about, one of
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Speaker 2: the challenges is that the Tax Office right now has
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Speaker 2: its hands tied to an extent. Where there is financial abuse,
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Speaker 2: they still have to rely on the laws that they
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Speaker 2: have at their disposal. What we've been advocating for has
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Speaker 2: been US inspired innocent spouse relief, So where you can
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Speaker 2: prove abuse, the AHO can release the victims survivor from
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Speaker 2: that tax liability and instead opt to pursue the perpetrator.
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Speaker 1: Okay, I see, very good, Okay, and where's that at
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Speaker 1: an We now.
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Speaker 2: Have bipartisan support, which I'm really grateful for and please
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Speaker 2: to see. So both the AOP and the Coalition just
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Speaker 2: last week announced that as part of their election promises.
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Speaker 1: So something that should hopefully come up in the next parliament.
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Speaker 2: A bit look forward to seeing that change, all right.
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Speaker 1: I will look out for that in my daily role.
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Speaker 1: All right, very good, Hey, thanks very much for coming
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Speaker 1: on the show. And ks Kumar from the Tax Clinic.
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Speaker 1: Very interesting work and best of luck with it.
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Speaker 2: Thank you for having me.
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Speaker 1: Great to have you on, folks. That was and ks
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Speaker 1: Kumar the Tax Clinic interesting material. If you listen back
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Speaker 1: to some of the shows we've had financial counselors and
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Speaker 1: we had the Rob Burgesson who was a financial counselor
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Speaker 1: telling us what he does there, and it's really interesting.
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Speaker 1: There's different layers when things go wrong and if you
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Speaker 1: can't pay for financial advice, it's it's quite a drop
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Speaker 1: down to where you could be taken in if you like,
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Speaker 1: by a financial counselor, where they would deal with you. Interesting.
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Speaker 1: That strata where people have businesses that go off the
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Speaker 1: rails is the strata that the tax clinics are looking at.
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Speaker 1: And of course the whole issue of abuse so big
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Speaker 1: in that area. Hopefully they get that legislation through parliament. Okay,
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Speaker 1: keep those emails coming, please, I have some space to
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Speaker 1: answer some questions, so let's have them. The Money Puzzle
30:48
Speaker 1: at the Australian dot com dot Au. Today's show was
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Speaker 1: produced by the Isama glue talk to you soon, show
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Speaker 1: the FO