The Senate Economics Legislation Committee has recommended that the Currency (Restrictions on the Use of Cash) Bill 2019 be passed, contingent on several recommendations, including a review of existing powers and penalty provisions to ensure that the bill is the “most effective response” to the black economy.
The bill, which proposes to make cash payments above $10,000 a criminal offence with imprisonment of two years and a fine, was originally set to commence from 1 January 2020, but Assistant Treasurer Michael Sukkar has now confirmed that it will not be retrospective in nature and that a new commencement date will be determined in due course.
The measure has been touted to quell black economy behaviour and money laundering by ensuring that entities cannot avoid scrutiny by making large payments in cash.
The Senate committee received 2,659 submissions in its inquiry, with a large number objecting on the basis that the legislated amount of $10,000 may be reduced by future governments, and that Australia may soon find itself in a negative interest rate environment.
However, it dismissed these as “hypothetical scenarios” and only rejected the “the conspiracy inherent in some of the contributions on the bill”.
While accepting concerns around the effect of inflation around a set $10,000 limit, the committee did not believe that an inflation-indexed cash payment limit would be practical to implement.
The inquiry acknowledged concerns from CPA Australia on the necessity of the bill, with the accounting body noting that existing powers were sufficient to address the black economy.
However, it also accepted the viewpoint of Chartered Accountants Australia and New Zealand (CA ANZ) that argued that a $10,000 cash limit would help level the playing field in certain industries, such as building and construction, where cash transactions are common and encouraged.
“Based on the evidence provided, the committee agrees that non-cash payment methods create clearer records; are usually more convenient for consumers and businesses; and increasingly involve lower costs, as they simplify record keeping and avoid the security, insurance and other costs associated with handling and holding cash,” the Senate committee said.
“The committee also acknowledges the importance of cash as legal tender both for transactions and as a store of value. It is important that the government strikes the correct balance in this regard.
“The committee reiterates that, contrary to a number of inquiry participants’ claims, cash will remain legal tender within Australia if the cash payment limit comes into effect, and individuals and businesses will continue to be able to withdraw money, in any denomination, from their bank accounts and hold it outside the financial system.”
It recommended that the government implement a “comprehensive communications strategy to inform the public and business of their responsibilities”, noting that there remains confusion with how the cash payment limit would work at a practical level.
‘Cure worse than the disease’
In a dissenting report by Greens Senator Peter Whish-Wilson, he called for the bill to be dropped, arguing that it chipped away at personal liberties.
“This bill is a classic case of the cure being worse than the disease,” Senator Whish-Wilson said.
“By criminalising the use of legal tender, and by taking a rose-coloured view of a world without cash, this government is blithe to the fundamental freedoms provided by hard currency, and is instead laying down a path towards surveillance capitalism and negative interest rates.”
Instead, he called on the government to show its commitment to fighting tax avoidance by targeting the “big end of town” through revealing the details of settlements between the ATO and companies challenging their tax bill and put an end to high-income earners reducing their tax liabilities by income splitting through discretionary trusts.
Senator Whish-Wilson also called for the government to combat money laundering by closing the exemption for real estate agents, accountants and lawyers from having to report under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
“AUSTRAC estimates that $1 billion in suspicious transactions flowed through the Australian property market from just one country, China, in just one year, 2016. But AUSTRAC is hamstrung because it has little oversight of the three professions that most facilitate this activity,” he said.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.