The Treasurer is provided with the power to make ‘rules’ to prescribe various matters, including the ability to prescribe exemptions from the cash payment limit offences. Refer to proposed S.12(5) and S.13(3) of the Bill. These ‘rules’ are proposed to be made in the form of legislative instruments.
The draft Currency (Restrictions on the Use of Cash – Excepted Transactions) Instrument 2019 specifies certain kinds of payments and circumstances in which certain payments are made or accepted that may be exempt from the cash payment limit. The Instrument specifies six types of payments that are not subject to the cash payment limit, being:
- Payments related to personal or private transactions (other than transactions involving real property) – this will apply where the entities are acting in a wholly private or personal capacity (e.g., private gifts other than donations to charities, inheritances and occasional private sales of assets like the private sale of a used car).
- Payments that must be reported by an entity under the anti-money laundering and counter-terrorism legislation (i.e., AML/CTF reporting entities), provided the entity with such a reporting obligation complies (or is reasonably believed to have complied) with their obligations.
- Payments made or accepted by a public official in which the public official is legally required to make or accept a cash payment in the course of their duties.
- Payments that only exceed the cash payment limit because the payment is part of a transaction involving collecting, holding or delivering cash and this is undertaken in the course of an enterprise of collecting or delivering cash (i.e., providing cash-in-transit services).
- Payments that only exceed the cash payment limit because the payment is, or includes, an amount of digital currency (e.g., Bitcoin) – this means that only the amount of physical currency in the payment is relevant for working out if the payment exceeds the cash payment limit.
- Payment that occur where no alternative method of payment could reasonably be used.
Payments related to personal or private transactions
This includes two potential exceptions outlined below:
- The first exception applies where a payment is made solely for one or more supply or acquisition, each of which are not made in the course or furtherance of an enterprise.
- The second exception applies where payments are made or received by an entity in circumstances where that entity reasonably believes that the payment is solely for supplies or acquisitions that are not made in the course or furtherance of an enterprise.
Effectively, for these purposes, the only circumstances in which an entity will not be carrying on an enterprise is where the entity is acting in a wholly private or personal capacity. Some examples:
- Personal or private transaction exemption - a second-hand camper van (originally purchased for private use) is listed in a Facebook group for a selling price of $11,000. Someone in the group sees the advertisement and agrees to purchase the van (for private use) and the price is negotiated to $10,000, which is paid in cash. Both parties involved in this transaction did not committed an offence despite the fact that the payment equals to the $10,000 cash payment limit, because they are related to a personal or private transaction, neither supplied nor acquired in the course of an enterprise.
- Not a personal or private transaction – Party A is a sole trader builder who provides a quote to Party B to build her a large deck and pergola at the back of her holiday home. Party B agrees to pay Party B $12,000 in cash for the job on the basis Party A provides a 10% discount on the original quote to Party B. Both Party A and Party B have committed an offence under the $10,000 cash payment limit as: 1) Party B has made a cash payment to George of equal to or more than $10,000; and 2) Party A has accepted a cash payment of equal to or more than $10,000. Importantly, the personal and private transaction exemption does not apply to either Party A or Party B, as Party A made the supply in the course of an enterprise (i.e., his building business).
- Reasonable belief that the other party is not acting in the course of an enterprise – Party A is selling his second-hand car to Party B. Party A is under the impression that Party B is acquiring the car for his own private use, after undertaking reasonable inquiries, such as searching the Australian Business Register. As a result, the exception to committing a cash payment limit offence applies (to Party A only) even if his reasonable belief is discovered incorrect after the transaction is done.
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