Due to start from January 2020, the Currency (Restrictions on the Use of Cash) Bill 2019 proposes to make it a criminal offence for an individual or business to make or accept a transaction from a business that includes $10,000 or more in cash.
This includes making or accepting cash donations of $10,000 or more.
Breaking this limit could result in a maximum penalty of up to two years imprisonment or a $25,200 fine.
Consumer-to-consumer transactions – such as a private car sale – would be exempt from the limit, as would bank account cash withdrawals and foreign exchange conversions.
But any payment to or from a business with an ABN (Australian Business Number) in exchange for goods or services would be subject to the new law.
This would apply to consumers using cash to pay for valuable goods or services, such as expensive jewellery, furniture, house renovations or cars from a dealership.
The Bill’s draft says the limit will apply to “the total price of a single supply of goods or services”, so split payments would not be exempt.
The Government welcomed submissions from the public from 26 July to 12 August 2019 for consideration before introducing the Bill to Parliament.
Cash limit “a step too far” – CPA Australia
In its submission to the public consultation for the bill, Head of Policy and advocacy for professional accounting body CPA Australia Dr Gary Pflugrath said CPA Australia has concerns about the Government’s intentions to impose criminal penalties for cash usage.
“There are a number of existing checks and balances in the system to address criminal enterprises already, and to link all large cash transactions to criminality is a step too far,” he said.
“The presumption that only tax evaders, money launderers and criminals use cash, and the mindset that these new offences are required to address criminality, has resulted in a proposed Bill and Instrument that run counter to well established criminal law principles and have the potential to affect many Australians.
” It extends criminal liability to innocent parties associated with a potential offender, such as partners in a partnership, and has application to Australian citizens and residents outside Australia.”
Dr Pflugrath said the Government should instead consider implementing a mix of administrative penalties (as opposed to criminal penalties) for breaches of the limit plus incentives for businesses to adopt electronic payment options.
“The focus on criminalising certain cash transactions is an extreme response to the problem of avoiding scrutiny,” he said.
‘Lower the limit and extend it to all cash payments and cryptocurrency’ – CAANZ
On the other side of the coin, Tax Australia Leader at Chartered Accountants Australia and New Zealand (CAANZ) Michael Croker made a submission suggesting the legislation doesn’t go far enough.
He said it could be improved by applying the $10,000 cash limit to all payments, not just payments made to or by businesses.
“Taking such an approach would make the law easier to enforce, make it harder for black economy participants to operate and reduce red tape,” Mr Croker said.
Mr Croker also said the $10,000 limit was too high and that cryptocurrency should be included in the reforms.
“Cryptocurrency is an obvious substitute for cash and can also offer the same anonymity. Excluding cryptocurrency from these reforms will only supercharge its use by black economy participants.”
‘Exempt medical and dental treatment’ – Australian Dental Association
In a sign of how far the Bill’s impact could be felt, even the Australian Dental Association (ADA) deemed it necessary to make a submission.
ADA president Dr Carmelo Bonanno said the legislation could impact on dentists accepting one-off or regular payments for expensive treatments, particularly from older Australians.
“While most of these treatments are paid for using digital currency, many older Australians don’t use online banking facilities and want to pay with cash for their treatment at the dentist’s surgery,” Dr Bonanno said.
“The ADA is requesting that further consideration is given to exemption medical and dental treatment within the legislation so as to avoid any unintended consequences.”
Cash limit background
First announced by then-Treasurer Scott Morrison in the 2018-19 Federal Budget, the cash limit was recommended by the Black Economy Taskforce – independently chaired by former global head of KPMG Michael Andrew AO – as part of a suite of measures to help prevent tax evasion and criminal activities.
In his budget speech, Mr Morrison said the black economy needs a light shone on it.
“Honest and fair businesses and taxpayers are being ripped off by those who think they are above paying tax,” he said.
“In response we will be implementing the recommendations of our Black Economy Taskforce, targeting sectors where there is higher risk of under reporting of income.
“These measures include outlawing large cash payments of greater than $10,000 in the Australian economy.
“This will be bad news for criminal gangs, terrorists and those who are just trying to cheat on their tax or get a discount for letting someone else cheat on their tax.”
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