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Law to ban cash purchases over $10,000 axed

Law to ban cash purchases over $10,000 axed

A proposed law to ban cash purchases of more than $10,000 and impose harsh penalties has been axed in the Senate.

The Currency (Restrictions on the use of Cash) Bill 2019 was on track to make it a criminal offence to pay cash for purchases of more than $10,000, with penalties of up to two years in prison and as much as $12,600 in fines.

The Senate abandoned debate on the legislation, with the government citing delays in bringing it forward due to prioritising the emergency economic response to the COVID-19 pandemic.

While the now-defunct law could return in another iteration once the COVID-19 pandemic has passed, for now it is dead.

Proposed changes to ban cash purchases

The bill to ban cash purchases over $10,000 was introduced late in 2019 as a way for the black economy taskforce to reduce tax avoidance and other black economy activities.

The aim was to prevent businesses from being able to receive large cash payments and not declaring the income, thus avoiding income tax.

The committee in support for the bill argued that non-cash payment methods were often more convenient, led to reduced costs, and simplified record keeping requirements.

The cashless economy and the proposed limit on cash purchases was also further supported due to the COVID-19 pandemic, which saw many stores banning cash transactions to avoid physical contact and stop local transmissions.

There was, however, a large amount of criticism in response to the proposed law, with some voicing concerns for companies and the elderly that may not be tech savvy enough for cashless payments.

It was also mentioned that those heavily involved in the black economy have moved from cash transactions and instead are relying on the complexity of digital transactions to support their activities.

Bill shelved but not forgotten

After the large amount of backlash received on the proposed changes, the law has now officially been shelved.

The official reason for this was due to the prioritisation of the COVID-19 pandemic, despite the pandemic furthering the use of cashless payments.

Regardless, due to the acceleration of cashless payments and pressure from regulators, we may see this bill return in the future after the COVID-19 pandemic has settled.

An increasing number of retail stores and restaurants are also taking the plunge to only accept cashless payments, which may further support the bill if it is reintroduced in the future.

How does this impact your business?

While the proposed law has been scrapped for the time being, there is no immediate impact on businesses.

However, as many suggest, it may not be long until Australia turns into a cashless society due to the increase in popularity of electronic payments.

As such, businesses that are still heavily reliant on cash may need to consider adapting their processes to be ready for when or if the bill is reintroduced in the future.

Even if the bill does not get reintroduced, there is no question that cash payments are slowly being phased out. Thus, it is becoming increasingly important for businesses to adapt to the current trends.

If you regularly receive cash payments or require assistance in getting your business ready for a cashless society, please speak to one of our business advisors today so we can help you through it.

LDB Group takes pride in bringing together tax and compliancebusiness advisoryaudit, and other services to get the best results for your business.

Give us a call us on (03) 9875 2900 or send us a message via our contact form below.

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