One of the interesting approaches to tackling the black economy in the recent 2018-19 Federal Budget was the announcement of a $10,000 limit on cash payments to business.
Unrecorded and untaxed transactions that occur in the community are estimated at up to 3% of GDP or around $50 billion. We have all seen examples of the black economy in action in the form of cash payments and money not ringing through a retailer’s till. This initiative targets high value transactions that are generally used to avoid tax obligations or for laundering the proceeds of a crime.
How will the new rules work?
The cash payment limit targets larger cash payments – typically made for cars, yachts and other luxury goods, agricultural crops, houses, building renovations and commodities – removing the ability of any individual or business to make a single cash transaction of $10,000 or more.
The limit would apply to all payments made to businesses with an ABN for goods or services. The impending restrictions would not apply to private sales where the seller does not have an ABN or cash payments to financial institutions.
Transactions at or in excess of the $10,000 threshold would need to be made electronically or by cheque. Splitting the payment into smaller amounts either as cash payments or a combination of cash and electronic payments would not be allowed. There would also be restrictions to prevent payment structuring to get around the payment limit.
At present, only financial services, banks and gambling industries have obligations for cash transactions of $10,000 or more. Under the Anti-Money Laundering and Counter-Terrorism Financing rules, transactions of $10,000 or more must be reported to the Australian Transaction Reports and Analysis Centre (AUSTRAC) within 10 working days.
To find out more about the Australian limit on cash transactions apply from 1st July 2019, come and speak to us Tax Ideas Accountants & Advisers…https://taxideas.com.au/booking/ Tel: (02) 8318 1545