Did you know four in five Australians prefer electronic payments rather than cash for purchases? Cash is likely to become a “niche payment” used only in emergencies, while cheques would be phased out altogether.

“Government is consulting to introduce a restriction on cash transactions to a threshold of $10,000”

The aim of this bill is to apply a threshold to a majority of financial transactions involving business. This change does not affect any transactions in cash when the other party is a consumer. But any payment to or from a business with an Australian Business Number (ABN) in exchange for goods or services would be subject to the new law.

Recently the Australian Taxation Office (ATO) emphasized that any unreported ‘cash in hand’ payments made to workers from 1 July 2019 will not be tax deductible:

• Payments to employees that do not comply with Pay As You Go Withholding (PAYGW) obligations: If there is no amount of PAYGW but it is a payment to an employee, it still MUST be reported to the ATO.

• Payments made to contractors where the contractor does not provide an ABN and the business does not withhold any tax: will also not be tax deductible from 1 July. Businesses must report payments to contractors under the Taxable Payments Reporting System even if they provide an ABN.

The above ensures that these payments are still within the ATO’s jurisdiction to trace 

Advantages of cash less transactions

There are many advantages of electronic payment systems. It involves less admin, paperwork, is cost effective, reduces risk of external and employee theft, quicker transaction times and convenience for customers

Big Brother is watching!!

The ATO’s ability to match and use data is very sophisticated. They collect information from a number of sources, including banks, other government agencies and industry suppliers. Our social media accounts could be monitored to get information about purchases of major items such as cars and real property.  This is then compared with the information against income and expenditure that businesses and individuals have reported to the ATO including cash sales, other bank deposits and online sales.

A Melbourne restaurant owner was found to have discrepancies between the business’ reported income and the data received by the ATO from their bank. The owner was given the opportunity to report any discrepancies to the ATO if they had made any errors before they started an audit.

A Nowra court convicted the owner of a computer sales and repair business on eight charges of understating the business’s GST and income tax liabilities. The ATO investigated discrepancies between income reported by the business and amounts deposited in the business owner’s bank accounts. It was found that the business failed to report income from online sales.

This is part of a broader ATO effort to close the cash in hand loophole.

Watch this space and we will enlighten with further updates.

Written for you by Aarthy Kumar