A former member of Redeemer Baptist School and Church has told a parliamentary inquiry her sister was placed in a dog collar and pulled by a lead, while another witness described the school as a “criminal gang who uses religion as camouflage”.

Speaking on the second day of hearings into the North Parramatta private school and its church – which has been described as a “cult” during the inquiry – Helen Johnstone said her family joined the community in 1976 when she was a child.

“Within months of joining the community, [my sisters] and I can remember feelings of discomfort, fear of adults within the community, and a sharp change in our lives,” she said. “It was a change for the worse.”

Johnstone told the inquiry her older sister was viewed as a “rebel” and subjected to regular abuse.

“I witnessed her experience some awful treatment, including a dog collar being placed on her neck and being pulled around by a dog lead,” Johnstone told the inquiry.

She told the inquiry she witnessed her sister being held underwater and thrown into a “filthy duck pond”, and “shunned, shamed and humiliated routinely”.

Johnstone also detailed the abuse of her foster brother, an Indigenous boy she believes may have been part of the Stolen Generation. She recalled her father belting the boy while he lay curled in the fetal position.

“He came into a home where learning consisted of punishment,” she recalled. “He was routinely hit and belted for not eating, getting homework answers wrong, soiling his pants or his bed, etcetera.”

Witnesses have told the inquiry corporal punishment was common within the church until as late as 2005.

“Sadly, he’s still in the community today and was subsequently adopted into the family. I’d like the circumstances around his arrival investigated,” said Johnstone.

The inquiry also heard sweeping allegations of financial misconduct.

Accountant Graeme Glossop, who previously took on the school in 2004, accused the institution of operating a “scheme of arrangement designed to avoid taxation.”

He told the inquiry the school and church were a “criminal gang who uses religion as a camouflage” and were “stealing government money”.

He said the school and church operate a “scheme of arrangement designed to avoid taxation,” and that the school and church were not paying fringe benefits tax.

Glossop said the church and school community “had a disease”. “It’s like a cancer going through that whole community, and people are getting affected by it,” he said.

Former member Barney Jones testified the institution enjoyed “a series of beneficial loopholes” used to amass wealth, including at least 40 properties valued at a minimum of $140 million.

Because volunteers are paid low stipends, Jones said the institution avoids payroll tax, GST, capital gains tax, fringe benefits tax, stamp duty, and HECS repayments. He highlighted what he called “double-dipping” into government funds, claiming members accessed Centrelink benefits to support their lifestyles due to their artificially low incomes.

Holding up a 102-page dossier documenting alleged legislative breaches and employment practices, Jones said he had raised the alarm with the Board of Studies (now the NSW Education Standards Authority) in 2005, but his warnings “fell on deaf ears”. NESA told the inquiry on Monday it was investigating the school under section 83C of the Education Act, which requires non-government schools to operate on a not-for-profit basis to remain eligible for government funding.

Redeemer leader and principal Jonathan Cannon was invited to attend the inquiry, but headmaster and elder Russell Bailey declined, citing concerns over procedural fairness.

In a written response, Bailey argued the inquiry was unfairly targeting the school, maintaining the school and church were two separate legal entities.

Bailey said the school’s 535 students had now been labelled as “members of a cult, despite not even being members of the Church (which is also not a cult)” .

“The inquiry should be ashamed of itself for that baseless aspersion,” Bailey wrote.

Both Jones and Johnstone told the inquiry there was “absolutely no difference between school and church.”