Black economy measures: limits on cash payments

Budget Review 2018–19 Index

Joe Ayoub, Dr Jonathon Deans

As discussed in the Targeting the black economy article in Budget Review 2018–19, the final report of the Black Economy Taskforce (‘the Taskforce’) made 80 recommendations to the Government.[1] Recommendation 3.1 of the final report was the adoption of a limit on cash payments for goods and services, which the Government accepted in its response, released on 8 May 2018.[2]

The recommendation has been included in the Budget as the Black Economy Package—introduction of an economy-wide cash payment limit measure.[3] Under this measure, there will be a limit of $10,000 for cash payments made to businesses for goods and services (whether by individuals or other businesses). The measure will not apply to individual-to-individual transactions, which is consistent with the Taskforce’s recommendation. The Government’s response noted that the measure was aimed at reducing money laundering and tax evasion; it also noted that the Government would consult on implementation of the limit.[4]

Prevalence of cash use

Research published by the Reserve Bank of Australia (RBA) in July 2017 showed that cash accounted for 18 per cent of total merchant transactions (by value), falling to 11 per cent for payments of $501 or more.[5] The RBA research did not state what proportion of transactions of $10,000 or more are made in cash. Cash was disproportionately used by those in older age groups, accounting for 51 per cent of payments (by number) for those aged over 65 years, compared with 37 per cent for all age groups. It was also disproportionately used by those in the lowest income quartile, accounting for 44 per cent of payments (by number) compared with 37 per cent for all quartiles. Other evidence of the extent of the cash economy can be found in the Parliamentary Library brief on measures arising from the report of the Black Economy Taskforce: Targeting the black economy.

Cash is used in the black economy because, unlike electronic transactions, it does not leave an obvious audit trail.[6] Non-compliance with taxation obligations enabled by the use of cash also provides businesses with an unfair competitive advantage by being able to offer to goods and services at a discount.[7]

Risks of cash use

Placing a dollar-value limit on cash payments for goods and services not only limits the opportunities to under-report income, charge lower prices and underpay GST, but also signals to the community that using cash for tax avoidance is not acceptable. It was noted in the Taskforce’s final report that implementation of a limit was broadly supported by stakeholders.[8]

The Taskforce’s final report noted that implementation issues will need to be addressed, including, for example, determining what constituted a ‘payment’, developing enforcement strategies such as incentivising the reporting of banned transactions and ensuring payments are not artificially structured to avoid the $10,000 threshold.[9]

A media report quoted the Minister for Revenue and Financial Services, Kelly O’Dwyer, as stating: ‘We’ve accepted $10,000 but we are interested in consultation around the figure as well’.[10] The Taskforce’s final report noted that several countries in Europe have equivalent limits, including France, Italy, and Spain, and that the European Commission is exploring whether to adopt a limit across the European Union.[11] A 2017 study by researchers at Harvard University and the Royal United Services Institute identified Jamaica, Mexico, Uruguay, and India as also having limits on cash transactions.[12] That study found that limits ‘represent a practical and relatively low-risk policy tool to tackle’ money laundering and tax evasion, with ‘very limited downsides ... in terms of the impact on legitimate economic activity’.[13]

A separate media report identified industries which may be affected as including real estate, vehicle sales, and horticultural farming.


[1]. Black Economy Taskforce, Black Economy Taskforce: final report, Commonwealth of Australia, October 2017.

[2]. Australian Government, Government response to the Black Economy Taskforce final report, 8 May 2018.

[3]. Australian Government, Budget measures: budget paper no. 2: 2018–19, 2018, p. 23.

[4]. This measure is distinct from and addresses broader purposes than existing requirements for ‘reporting entities’ (those that provide certain financial, gambling, bullion and other prescribed services) to report cash transactions of $10,000 or more to Australia’s anti-money laundering and counter-terrorism financing regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC) (see AUSTRAC, ‘Threshold transaction reports (TTRs)’, AUSTRAC website).

[5]. Reserve Bank of Australia, How Australians pay: evidence from the 2016 Consumer Payments Survey, Supplementary Statistical Tables.

[6]. Black Economy Taskforce: final report, op. cit., p. 49.

[7]. Ibid., p. 53.

[8]. Ibid., p 55.

[9]. Ibid., pp. 56-57.

[10]. J Mather, ‘Government binned cash amnesty idea’, Australian Financial Review, 11 May 2018, p. 8.

[11]. Black Economy Taskforce: final report, op. cit., p. 55.

[12] P Sands, H Campbell, T Keatinge, and B Weisman, ‘Limiting the use of cash for big purchases: assessing the case for uniform cash thresholds’, Occasional Paper, Royal United Services Institute and Mossavar-Rahmani Center for Business and Government, September 2017, pp. 19–21.

[13]. Ibid., p. 35.



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