Proposal to set limits for business cash payments
Like many businesses, yours probably does a bit of your business in cash. And if that’s the case, beware – as the government might have you in their sights.
In an effort to round up as many extra tax dollars as possible, the government is proposing a crackdown on cash payments.
They’re considering setting a limit for how much businesses can accept in cash.
By doing so, the government hopes to instead force much of the $21 billion that filters through the cash or hidden economy each year in Australia through to declared revenue instead, making it taxable.
Activities to be targeted include cash in hand work for trades and renovations, undeclared rental income and any other large cash payments.
The government say that by collecting more tax from these business payments, they’ll be reducing the individual tax burden for all Aussies.
Following Europe’s lead
The government’s plan is based on recent moves in European countries such as France and Sweden.
In France, the government is banning cash payments over 1000 Euros.
And in Sweden, when trading in cash businesses have to use a certified cash register that sends the details of all sales to the Swedish Tax Office.
$100 bills to go?
As part of the crackdown, the government will also consider removing the Aussie $100 note from circulation, as they claim it makes financial crime easier.
Apparently there are 3 times as many $100 notes in circulation as there are $5 notes.
By setting a limit for cash payments to businesses and forcing these into electronic payments instead, the government suggest the need for $100 notes will be significantly reduced.
They claim this in turn will make the fraudulent movement of large amounts of cash much harder – cutting down on the black economy, money laundering and the funding of terrorism.
Electronic payments preferred
While many businesses use cash payments to rescue their tax obligations, some are finding that many customers are now reluctant to pay in cash.
People are using ATMs less, and instead conducting most of their purchasing and payments electronically.
As well as card-based transactions, the use of online payments and mechanisms such as Apple Pay are on the rise.
What do you think of the proposed cash crackdown? How will it affect your business cash flow?