Senate drops controversial $10,000 cash ban that would have “hit SMEs hard”

The Senate voted against the federal government’s plan to ban businesses from making cash payments over $10,000 on Thursday, after widespread concern from industry groups that the bill would criminalise legitimate businesses.

Under the proposed Restrictions on the Use of Cash Bill, businesses found to have made or received cash payments of $10,000 or more would have faced criminal sanctions of up to two years in jail and penalties of up to $25,000.

However, after more than a year of opposition from accounting groups, small businesses and the community at large, the Senate unanimously voted to drop the bill when One Nation Senator Malcolm Roberts brought the motion to remove it.

CPA Australia tax expert Elinor Kasapidis says the government’s claim that the ban was needed to deal with the black economy simply didn’t take into account the effects it would have on small business.

“The response proposed by the government was very extreme. It was turning people and businesses who use cash into criminals,” Kasapidis tells SmartCompany.

The black economy taskforce made the initial recommendation to criminalise large cash payments in 2017, finding that such a measure would prevent tax avoidance among crime syndicates. The measure was then included in the 2018 federal budget.

“We were concerned that to solve a very small and limited problem, the government was going to affect many, many other Australians,” Kasapidis says.

Kasapidis says the ban on large cash payments would have mostly affected small businesses with large cash takings such as bakeries, laundromats and those offering personal services, from hairdressers and beauticians to massage therapists.

CPA researched how much it would cost a small business to put all cash payments above $10,000 in the bank and found it would have brought thousands of dollars of additional costs to individual businesses.

“This was really going to hit small businesses hard,” Kasapidis says.

The bill was introduced to federal parliament in September 2019, however, since last November it remained in the Senate where it never received enough support to be passed.

Overall, Kasapidis says the government should have approached the issue by offering SMEs assistance to digitise their transactions instead of considering criminal sanctions.

“The government should be working with the banks to reduce fees and improve access to electronic banking systems as the starting point,” she says.

“We believe that the government’s approach needs to be one of help and educate, not of punish and criminalise.”