On Friday 25 May 2018, Treasury released a consultation paper to implement the 2018 Budget Measure to introduce an economy-wide cash payment limit of $10,000. It invites comments by 24 June 2018. Minister O’Dwyer also released a Press Release. The measure would apply from 1 July 2019.
The Government proposes that a cash payment, over the $10k limit, to anyone with an ABN (principally businesses), for goods and services, will need to be made using electronic payments systems or by cheque. This measure recognises that cash payments remain important for the economy, so it targets only high value cash payments (which are more likely to be motivated by tax avoidance, financing terrorism or other harmful purposes – see the AMLCTF Act 2006).
The consultation builds on recommendations made by the Black Economy Taskforce in their final report to Government. This was recommendation 3.1. The Final Report and the Government’s response are available on the Treasury website.
Existing systems around the $10k cash amount
Australia does not have a cash payment limit, though entities have discretion to refuse to accept cash payments made using coins in excess of a certain amount. The $10k limit, however, does follow the limit used by law enforcement, intelligence and national security agencies regulate certain designated services (broadly, financial services, services relating to bullion or gambling services) under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.These entities are required to submit Threshold Transaction Reports (TTRs) to the Australian Transaction Reports and Analysis Centre (AUSTRAC) within ten business days where a transaction is undertaken of AUD $10,000 or more (or foreign currency equivalent) in cash. These TTRs provide valuable financial intelligence about the movements of large amounts of cash. Current AML/CTF reporting obligations will be leveraged to assist the administration and enforcement of the cash limit, in particular the combination of threshold transaction reporting and reporting suspicious matters.
Systems overseas and lessons for Australia on ‘integrity’ measures
A number of countries already have implemented a cash payment limits to combat the black economy, terrorism financing and as austerity measures following the Global Financial Crisis. France has a limit of EUR 1,000 (AUD 1,600), Spain has a limit of EUR 2,500 (AUD 4000) and Italy EUR 3,000 (AUD 4,800).
Also, many European countries have also introduced complementary integrity measures, aimed at restricting the ability to structure payments to get around the payment limit. Examples that might be relevant, in Australia, include: long term payment plans (where the total purchase price is above the cash payment limit); Digital currencies; and Traveller’s cheques.
Specific exemptions
Treasury also wishes to consult on the need for exemptions, such as (potentially): those living in remote areas or charities, may be negatively impacted as they may need to rely on the ability to make or receive large cash payments.
Many foreign jurisdictions either have an exemption or apply a higher cash payment limit to foreign tourists to reflect the fact that whilst they are able to legitimately have large sums of physical currency, they may not be able to make transactions through electronic payments systems. For example, in France the cash payment limit for residents is EUR 1,000 but non-residents have a higher limit of EUR 15,000.
Striking the right balance
The Government is seeking to strike the right balance between cracking down on black economy participants, using large cash transactions to avoid their tax obligations, and ensuring that businesses is not, generally, unduly burdened by increased red tape.
The consultation paper is also seeking the views of stakeholders to identify further issues for consideration in implementing this measure. This includes views on reporting obligations, integrity measures and whether any exemptions apply.
27.5.18
[FJM; LTN 99, 25.5.18; Tax Month May 2018]
Study questions (answers available)
- Is the Treasury consulting, on the Budget Measure, to introduce a $10k cash payment limit, to operate from 1 July 2109?
- Does Australia already have a $10k cash reporting threshold?
- Would the limit apply to all payments for goods and services?
- Is France’s equivalent cash payments limit €5k?
- In the light of Treasury trying to strike the right protection and red-tape mix, is it considering ‘integrity’ measures?
- In providing exemptions, for foreign tourists, does France double the limit (applying to the ordinary population)?
