Money Talk

Cash Payments Beware!

Posted by H Youssef Accounting on Oct 3, 2019 10:00:00 AM
H Youssef Accounting
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There was a time in business where Cash was King, sadly that time is coming to an end as the Government looks to introduce new measures that could potentially see criminal penalties for cash payments or receipts above $10,000.

Businessman in handcuffs holding bribe against football pitch at night with ball and lights

In order to combat the black economy, the government is proposing to introduce a $10,000 cash payment limit for transactions between businesses and individuals from next year. The Currency (Restrictions on the Use of Cash) Bill 2019 has been introduced to establish the cash payment limit and introduce offences for entities that make or accept cash payments of $10,000 or more from 1 January 2020.
 
An exposure draft for the government’s crackdown on lost tax revenue outlines fines of over $25,000 and a maximum penalty of two years imprisonment for business owners who knowingly accept cash payments with a value that equals or exceeds the $10,000 limit after 1 January 2020.

These offences protect the integrity of the taxation law and other Commonwealth laws by ensuring that entities cannot avoid scrutiny and facilitate their participation in the black economy by making large payments in cash.

The Black Economy Taskforce Final Report found that large cash payments can be anonymous and untraceable allowing businesses to under-report their income and for offering consumers discounts for transactions that reflect the businesses’ avoided obligations.

The Bill creates new offences that apply if an entity makes or accepts cash payments with a value that equals or exceeds the cash payment limit. However, the offence does not apply if the payment is either of a kind specified in the rules made under the Bill or made or accepted in circumstances of a kind specified in the rules.

The government, however, clarified that the cash payment limit will not apply to transactions where an authorised deposit-taking institution accepts deposits or pays out withdrawals. “Exempting these entities will be necessary for the public to have a legitimate way of moving large amounts of cash into and out of the financial system,” the exposure draft reads.

The cash payment limit is $10,000. The cash payment limit will apply only to businesses and individuals that make or accept payments involving $10,000 or more in cash. The majority of businesses’ and individuals’ daily interactions involving cash are not expected to exceed the cash payment limit.

The cash payment limit applies to payments made or received from 1 January 2020.

The cash payment limit does not apply to private transactions (excluding real property transactions). Transactions with financial institutions or consumer to consumer non-business transactions will not be affected.

This Bill fully implements the measure Black Economy Package — introduction of an economy-wide cash payment limit from the 2018/19 Budget.

The ATO has also announced it will visit around 700 small businesses in Western Australia in August, as part of its strategy to deal with the black economy. Nearly 9,000 businesses were visited in the 2018-19 financial year in all states and territories, across a variety of industries. 
 
The Black Economy Taskforce estimates that the black economy is costing the community as much as $50 billion, which is approximately 3 per cent of gross domestic product.

 

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Topics: business, tax, small business, money, cash flow, risk