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Former members of the Church of Scientology have told a Senate committee of the "ruthlessness" of the church and its judicial system, and argued it should not be eligible for tax-free status.

"Australian taxpayers should not be funding systematic, organised abuse," said Janette Vonthehoff, who said her passport was taken from her and she was forcibly prevented from returning to Australia from the US when eight weeks' pregnant because the organisation ordered she must finish "training".

Ms Vonthehoff said she resigned from the organisation in 2007 because of bullying, two coerced abortions and Scientology justice proceedings which included its own court hearings.

A Sydney tax lawyer and social identity, Louise McBride, defended the group and clashed with the independent senator Nick Xenophon during the hearing.

Senator Xenophon accused Ms McBride of being "unprofessional" for suggesting the committee was "making a mockery of the law" by considering his private member's bill. The bill seeks a tax-law amendment that would require religious and charitable organisations to meet a public benefit test.

Ms McBride said she was not a Scientologist and had never been to a Scientology church. She said, "You are singling out a group in a government bill as the purpose of the bill. [It] is discrimination; but for parliamentary privilege, it would amount to libel."

Another former member, James Anderson, said he and his wife had paid up to $1.2 million in Scientology training fees.

Senator Xenophon said Scientology "auditing" sessions were regarded by some as a cross between personal counselling and Maoist self-criticism, and had been a factor in the British Charity Commission deciding against granting it tax-free status there.

The Church of Scientology social reform director, Virginia Stewart, said the sessions made members "a better person", and the fee charged formed the basis of donations to the organisation.

When asked about members paying hundreds of thousands of dollars for training, Ms Stewart replied: "I don't think courses within the Church of Scientology come to those sums."

Australia had a proud tradition of religious tolerance and the bill would "[put] at risk the financial future of charities and religions in Australia", Ms Stewart said.

However, Senator Doug Cameron said there was nothing in the bill about religious freedom, and it was "a nonsense" to say it would be the death of Scientology.

The Scientology New Zealand representative, Mike Feriss, said a charities commission in New Zealand - with a similar public benefit test - had not impacted on Scientology's operation.

But Mr Feriss could not explain why the organisation's income fell from $2.6 million to $374,000 the year after the commission required it to publish financial statements. His first reply, that it was due to the currency exchange rate, was laughed at by the committee.

When Senator Xenophon asked the organisation if it would be concerned if organisations involved in systematic harm were given tax-free status, Ms McBride said "Yes", but said the same scrutiny should apply to the Catholic Church.

A lawyer for other charities, Andrew Lind, said he supported a charities commission, but warned against creating a law that applied to all charities in order to deal with one organisation.