Cash Payments Limit Coming Soon - 26 July 2018
The Government is planning to introduce an economy-wide cash payment limit of $10,000 as a part of its crackdown on the black (cash) economy.
As a part of its crackdown on the black economy, the Government is planning to introduce an economy-wide cash payment limit of $10,000. Any payments made to businesses for goods and services from 1 July 2019 would be captured, and if the transaction exceeds $10,000, the payment will need to be made using an electronic system or by cheque.
This proposed measure has been introduced in response to the findings of the Black Economy Taskforce Final Report. The report noted there were significant risks to legitimate commercial behaviour resulting from using large undocumented cash payments to purchase cars, yachts, other luxury goods, agricultural crops, houses, building renovations, and commodities. According to the Minister for Revenue and Financial Services:
“We…know that businesses that insist on cash payment may be doing so to avoid their tax, retain welfare payments, or avoid child support and other obligations, and may therefore receive an unfair competitive advantage over those businesses that do the right thing.”
The proposal will not apply to financial institutions, so there will be no barrier on the ability of individuals, businesses, or other entities to deposit large amounts of cash with their bank or to deposit cash in paying off loans with a financial institution. However, it should be noted that any such cash deposits would be reported to AUSTRAC under the existing Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws.
Currently, the Government is planning to leverage the AML/CTF obligations to assist in the administration and enforcement of the new cash payment limit. A combination of threshhold transaction reporting and reporting of suspicious matters will be deployed, with the Black Economy Hotline facilitating community referrals on suspicious behaviour. Penalties will apply to both parties to the transaction should the $10,000 limit be breached. That is, both the cash payer and the receiving business may be penalised. According to the Government, this will ensure that both businesses requesting cash payments and consumers pressuring businesses to take cash in exchange for a discount are captured by the new measure.
If Australia implements this proposal, it will join many other European countries that have introduced similar cash payments limits. The UK is currently consulting on the issue in a bid to crack down on those who use cash to evade tax and launder money. It seems the inevitable crackdown on cash and its links to illegal activities and avoidance of tax has begun.
Are You Ready For The Ban On Cash?
If you would like to find out more about the proposed cash payments limit and how it may affect the way you do business, contact us today.
26 July 2018
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.