Tax Expert Weighs In On Push To Ban Cash Transactions Over $10,000
A tax expert has weighed in on the Federal Government's push to ban cash transactions over $10,000.
The move was announced in the 2018-10 Federal Budget released in May.
Now the Currency Restrictions on the Use of Cash Bill 2019 is quietly being considered in Federal Parliament.
Under the change, if it is approved, cash transactions between businesses and individuals would be limited to $10,000.
Ashley Debenham from Etax Accountants said the good news is, he doesn't think the planned ban on cash transactions above $10,000 will impact too much on retirement savings.
He said the Federal Government has announced two exceptions as part of the draft legislation, "one of them is basically depositing or withdrawing money from a bank, so if you do need to withdraw or deposit more than $10,000 into the bank then that is generally going to be an exception".
"And the other one is for individual transactions, like if you're buying a second hand car or something like that.
Mr Debenham stressed that the ATO is really concerned about cracking down on the 'black economy' and is trying to track people who are earning money and not reporting it to the ATO.
In terms of if or when the official cash rate enters negative territory and how that would impact people with money in the bank, in terms of them being forced to pay their bank for keeping their money for them. Mr Debenham said "hypothetically speaking it's possible and there is a chance it could happen".
But he added "the one caveat there, I would say, is to keep in mind that the official cash rate that the RBA is kind of continuing to lower and the bank interest rates are two very different rates".
"So it wouldn't just need the cash rate to drop below zero, it would also need the banks to drop their savings interest rates into negative territory as well.
"To me, in the short term, or even the next few years, it seems pretty far fetched to see a reality in Australia where we actually pay the banks to hold onto our savings, but that being said, in today's day and age, nothing can be ruled out.
One market watcher who resides in Brisbane is highly critical of the move, saying "banning cash is aimed at stopping a run on the banks and to ensure that negative interest rates are effective once the Reserve Bank of Australia goes there, possibly in 2020".
By 'goes there', he suspects we will see the official cash rate enter negative territory some time in 2020.
The rate was cut by 25 basis points in June and then dropped to a new low of 1.0 per-cent.
The Black Economy Taskforce recommended the changes claiming it would help reduce crimes like money laundering and tax evasion.
Our market watcher rubbished that stance, saying that the move is aimed at stamping out money laundering and tax evasion, saying "that's a smoke screen to get the legislation approved".
If passed, the law would come into effect on January 1, 2020 and a law breaker could be jailed for a maximum of two years and fined up to $25,200.
Mr Debenham admits we are governed somewhat by what's happening on Wall Street, saying a recession is possible or an economic downturn could be on the cards in Australia going forward but stressed that this is all hypothetical.
In terms of having an APRA approved fund manage our Superannuation versus a self-managed fund, saying the latter is about gaining control of our money. He said the best thing for an individual will vary from person to person.
He recommended sitting down with a Financial Adviser to discuss the options before making the move, saying we need to have some free time to be able to self-manage.
Our expert added that "further dangers in the way this two piece legislation has been written are to allow the Treasurer to lower the $10,000 without a Parliamentary vote".
He suspects the Bill will get voted and approved but said it references the regulation and the regulation can be updated without much fanfare".
By Michelle Price