Despite many SMEs being against or not seeing the need, the government’s crackdown on cash payments is steaming ahead, commencing consultations on making cash illegal for purchases over $10,000.
The proposed measure was announced in the budget to ensure Australians receive a fair go and that illegal black economy behaviour is stopped in its tracks, said Minister for Revenue and Financial Services, Kelly O’Dwyer.
The cash payment limit is proposed to apply to payments made to businesses for goods and services from 1 July 2019. In addition, transactions in excess of $10,000 will need to be made using electronic payments systems or by cheque.
Ms O’Dwyer said the consultation is about striking the right balance between cracking down on black economy participants and ensuring that businesses doing the right thing are not unduly burdened by increased red tape.
“The Black Economy Taskforce found significant risks to legitimate commercial behaviour can result from large, undocumented cash payments being made for cars, yachts and other luxury goods, agricultural crops, houses, building renovations and commodities,” Ms O’Dwyer said.
“We also know that businesses that insist on cash payment may be doing so to avoid their tax, retain welfare payments, or avoid child support and other obligations, and may therefore receive an unfair competitive advantage over those businesses that do the right thing.”
However, many business leaders are against the move, describing it as anything from “odd” to downright destructive.
One My Business reader suggested that certain niche industries rely heavily on cash, such as the lucrative opal trade.
“Opal buyers for example always turn up with a briefcase full of cash and leave with a briefcase full of opal. Many of the buyers are from overseas and are only in Australia for a few days,” said the reader.
“Opal[s are] small and each individual stone is individually and subjectively valued and that briefcase will contain a lot more tha[n] $10,000. There is no international scheme like there is for diamonds. Neither the buyer or seller want the items out of sight until the transaction is concluded (credit cards can be reversed, cheques can bounce or be forged and are not instantly cleared, bank transfers are often done overnight, especially if different banks involved, stones could be swapped etc).
“So then you need an exception and once there is one exception...”
Another added that banks can be mistrusted, making cash the preferred method of payment: “Some foreigners don't trust banks — with good reason. Look at the Ukraine.”
A third reader suggested the rules would be easy to get around for businesses that are willing to accept payments over multiple days.
“I guess some our clients will just have to pay over a number of days. As long as I am doing the right thing, it is too hard for me to police what our clients are doing,” noted the reader.
The consultation paper is available on the Treasury website. Submissions close on 24 June 2018.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
Insolvency accountant asks: Have you paid your tax yet?
By John Papadopoulos
Ask the Experts: Does automation stack up financially?
By Christopher Overton
Opinion: How bad do things have to get?!
By Adam Zuchetti