Proposed cash payments limit legislation abandoned

A cash payments limit was first mentioned in the 2018-19 Federal Budget as a way to tackle the black economy, which has been estimated at being worth up to $50 billion a year. Following this, the Government moved to introduce a $10,000 cash payments limit through the Currency (Restrictions on the Use of Cash) Bill 2019. This bill was abandoned on 3 December 2020.

Cash payments can be anonymous and untraceable. Some businesses take advantage of this by not reporting these transactions, which gives them an underhand benefit over competitors who are operating within the law and paying tax on their full income. By introducing a cash payments limit, the Government may have been better positioned to identify where income was under-reported, thus being able to apply the relevant taxes and even out the playing field for competitors.

So how would a cash payments limit help?
The proposal was that for purchases up to the $10,000 limit, cash could still be paid or received. However, where a purchase was for $10,000 or more, up to $10,000 could still be paid or received in cash, but the amount above $10,000 would need to be provided electronically or by cheque. This was also to apply to purchases paid in instalments – only $10,000 could be paid or received in cash across all the instalments relating to the one purchase.

As electronic and cheque payments are more traceable, it would have been easier for authorities to identify and respond to black economy activity. Non-compliance would have been a criminal offence leading to up to 2 years in jail and/or fines in the tens of thousands.

What were the concerns with the bill?
Some of the concerns submitted in response to the bill were:

    1. Cash is legal tender – a customer may choose to pay in cash to avoid transaction fees and charges that would apply if they paid by debit or credit card
    2. Remote and regional areas may not have reliable access to internet, electronic banking or phones, meaning cash can be a very necessary part of business
    3. In some scenarios it may disadvantage a business to not be able to accept cash payments
    4. The proposed limit is too high
    5. Whether imposing a cash payment limit will actually address the core problem of tax avoidance
    6. Whether the severity of the proposed penalties is appropriate
    7. The initial timeframe proposed was not sufficient to educate the community and businesses about the legislation.

While the bill passed through the House of Representatives in October 2019 it proved controversial in the Senate and is no longer proceeding. It remains possible it may be reintroduced in the current or an amended form sometime in the future.

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