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The New $10,000 Economy-Wide Cash Payment Limit (1)

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What is it for?

Over the last few years, the Australian Government has implemented a number of different measures as part of its ‘Black Economy Package’ in a continuing effort to combat the black economy. The introduction of new $10,000 economy-wide cash payment limit is the latest measure, which was recommended by the Black Economy Taskforce in order to tackle tax evasion and money laundering.

Large undocumented cash payments can be, and have been, used to avoid tax or to launder money generated from criminal activity. The main driving force behind the introduction of this measure is curb this practice. Also, in order to increase the transparency in such transactions, payments that are over a threshold must be made through electronic payment system or cheque.

This will be achieved by the establishment of a new Act, which is contained in the Currency (Restriction on the Use of Cash) Bill 2019 (‘the Bill’). The original commencement date was 1 January 2020, however, according to Treasury, the Bill is currently being considered by a Senate Committee, and the Assistant Treasury stated that “a new commencement date will be determined following consideration of the committee’s report” if the bill is passed by the Parliament; and the Government has advise the Committee that it does not intend for the limit to apply retrospectively.

 

Existing laws require the reporting of cash payments for goods and services of $10,000 or more by businesses that provide certain high-risk services (e.g., businesses that provide financial services, deal in bullion and provide gambling and digital currency exchange services). This is designed to mitigate the risk of large, anonymous cash payments being used to facilitate money laundering and terrorist financing. Refer to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (‘the AML/CTF Act’) and the Financial Transaction Reports Act 1988 (‘the FTR Act’).

To give effect to the proposed new cash payment limit, the Government intends to establish two new categories of offences, which will apply if an entity makes or accepts payments equal to, or in excess of, the relevant cash payment limit, which is currently set at $10,000.

The two new categories of offences are virtually identical and apply in the same circumstances, with one big difference, being that:

  • one is a strict liability offence (no requirement to prove ‘guilty mind’ exists);
  • whilst the other contains a fault element (it may comprise either intention, knowledge, recklessness or negligence).

 

  • Should you have any queries, please contact Tax Ideas Accountants & Advisers on +61 2 83181545
  • Alternatively, you can book an appointment in our live calendar.

 

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Written by Panbo Ye

I help people discover POWERFUL unknowns in Tax Ideas | Wealth Strategies | Retirement Planning | Finance Solutions!

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