Cash payment A$10,000 limit stirs debate
(20 August 2019 - Australia) Major merchant payments market stakeholders have demanded that the Federal Government withdraw proposed laws limiting the use of cash to A$10,000.
The measures were first announced in the 2018/19 Federal Budget and designed to dismantle the growing ‘shadow economy’.
Australians could face fines of over A$25,000 or jail sentences of up to two years for transactions using cash sums of greater than A$10,000 to a business with an ABN, for example purchasing a new or used vehicle. Private transactions between individuals with no ABN would be exempt from the new rules. If passed successfully the laws would take effect in Q1 2020 and for reporting AUSTRAC entities the following year.
The announcement comes as reserve banks globally in fact increase the volume of cash in circulation. The International Monetary Fund (IMF) observed that the number of US$100 notes in circulation had for the first time in history overtaken the number of $1 bills in circulation in 2018 and the number of US$100 bills has doubled since the 2008 Global Financial Crisis (GFC). The Reserve Bank of Australia (RBA) has injected more than A$76 billion worth of polymer banknotes into circulation of which 93 percent are A$50 and A$100 notes.
KPMG implicitly supported the proposed laws but suggested the ban should be set at a lower limit between A$2,000 and $5,000. The Australian Chamber of Commerce and Industry (ACCI) voiced its opposition to the move to ban large cash transactions by arguing there is no ‘hard evidence’ indicating it was a broad-based crisis or that cash itself is contributing to black market activity. "This policy will do little to nothing to inhibit black market or illegal activity” the ACCI stated in a 2018 submission to Treasury after the budget change was announced.
“There is already a number of existing checks and balances in the system to address criminal activity” said CPA Australia External Affairs General Manager Paul Drum.