Crackdown on cash as limit set on payments
THE war on cash has officially entered the shooting phase.
Just as nothing good ever happens after 2am, no one ever paid for something with $10,000 in cash for a legitimate reason, according to Treasurer Scott Morrison.
From July 1, 2019, cash payments of more than $10,000 made to businesses for goods and services will be banned as the Turnbull Government seeks to crack down on the $50 billion "black 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," Mr Morrison said in his Budget speech. "It's not clever. It's not OK. It's a crime."
Under the measure, transactions over the threshold will have to be made through electronic transfer or by cheque, but transactions with financial institutions or between individuals will not be affected.
It's the most high-profile recommendation to be adopted from Treasury's Black Economy Taskforce, which was established in 2016 and made a number of interim recommendations incorporated into last year's budget. The final report and the government response were released as part of Tuesday's budget.
"There is a strong sense of community outrage at the inequality and unfair disadvantage created by the black economy," taskforce chair Michael Andrew said.
"I hope that by creating an efficient, level playing field we can lower taxes, treat all businesses and workers fairly, increase community services or reduce debt if all Australians operate within the rules."
In its response, the government said it agreed with or supported the majority of the recommendations, including potentially requiring wages to be paid into bank accounts, effectively outlawing cash-in-hand payments. Workers in the "gig economy" will also face greater scrutiny.
The government said it was "encouraging the transition to a digital society". "Cash provides an easy, anonymous and largely untraceable mechanism for conducting black economy activity," the response said.
"Cash payments make it easier to under-report income and avoid tax obligations. This allows businesses transacting in cash to undercut competitors and gain a competitive advantage.
"The taskforce identified examples of large undocumented cash payments being made for houses, cars, yachts, agricultural crops and commodities. These practices perpetuate black economy activities and hurt honest businesses."
The government said cash would "still remain a legitimate means of purchasing goods and services", but that advances in digital technology were increasingly providing a viable alternative.
"Electronic transactions also offer a number of benefits for Australians, often being safer, easier and more cost-effective," it said.
"Consumer preferences are already driving this change with Australians being amongst the highest users of digital transactions in the world."
Cash payments have fallen from 69 per cent of Australian transactions in 2007 to just 37 per cent in 2016, and Aussies are the world's biggest users of tap-and-go technology.
"Despite Australians embracing this change, there is a small cohort of people who continue to rely on cash to enable or fund their participation in the black economy," the response said.
"Australia is not alone in contemplating a cash limit. A number of other countries such as France, Portugal, Greece, Spain, Italy and Belgium have cash limits varying from $1600 to $4800. Israel and the UK have also been reported to be contemplating or consulting on cash limits."
The government will also strengthen its business identity verification and overhaul how it manages the Australian Business Register, with the potential introduction of an ABN renewal scheme.
Multiple business registers across government, some of which still rely on paper-based forms and involve manual processing, are "not adequately linked to enable the identification of fraudulent behaviour".
It said streamlining and modernising the systems would make it easier to identify businesses that were creating multiple entities or hiding behind fraudulent credentials to avoid their obligations.
Financial Services Minister Kelly O'Dwyer said the report highlighted how the black economy was "harming those less able to protect themselves and penalising those doing the right thing".
"These people bear the cost of the individuals and businesses dishonestly participating in the black economy," she said. "While the financial costs for businesses and individuals are significant, it is the societal costs that really bite."
Meanwhile, an additional $318.5 million in funding over four years will be provided as part of the cash crackdown, which will include a new multi-agency Black Economy Standing Taskforce expected to bring in an additional $3 billion in revenue over the next four years.