Australian Senate axes plans to ban cash usage above $10,000

Controversial bill threatened to jail those conducting large cash transactions

The Australian government has shelved plans to ban cash transactions of A$10,000 (US$7,730) or more, after its legislation was rejected by the Senate.

The Currency (restrictions on the use of cash) Bill 2019 would have prohibited large cash payments and jailed those who evaded the ban.

At the beginning of December 2020, the Australian Senate voted to discharge the bill from discussion following a motion from the country’s far-right One Nation party.

The bill was first introduced to the House of Representatives in 2019 by the assistant treasurer and minister for housing, Michael Sukkar, as a way to stamp out money laundering. However, One Nation said the law focused only on criminalising legal tender for everyday means.

The A$10,000 limit would not apply to private transactions such as the sale of a car between two individuals who are not running a business. The private transfer of funds to family members would also have been permitted.

Those who disobeyed the law would have been threatened with up to a two-year jail sentence or a fine of up to $25,000. Currently, cash transactions above $10,000 must be reported to the Australian Transaction Reports and Analysis Center (Austrac). 

“This is a fantastic win for all Australians, particularly rural and elderly Australians where the use of cash is still prevalent,” One Nation senator Malcolm Roberts said on the result.

The bill had also faced opposition from national advocacy group the Australian Taxpayers Alliance (ATA). In a statement, the ATA said: “The cash ban claimed to crack down on the black economy. In reality, the only thing it attacked was our economic freedom.”

“Australians should be able to choose in what form they make legal purchases, without being forced into the banking system,” said ATA policy director Emilie Dye. “The cash ban was a clear example of government overreach, deciding what kind of legal tender Australians could use.”

In its response to a report from the Black Economy Taskforce, the Australian government announced in the 2018–19 budget that it would introduce a cash payment limit with effect from July 1, 2019. This was extended to January 2020 in the 2018–19 Mid-Year Economic and Fiscal Outlook. It was later delayed again, to January 2021.

The bill passed the House of Representatives in October 2019, but concerns were raised by several politicians. When passed to the Senate, an inquiry was launched. 

The majority of submissions to the Senate’s inquiry opposed the cash ban, arguing the January 2021 start date for the proposed laws was unworkable, the bill was an infringement of people’s civil liberties and it could exacerbate the impact of negative interest rates on ordinary citizens.

Some also argued there was no firm evidence that stopping payments of cash for purchases above A$10,000 would decrease the black economy. There were also objections to the severe penalties under the proposed law, that included fines up to A$25,200 alongside imprisonment, which would apply to both the business and the individuals involved in the transaction.

However, Sukkar said the bill would ensure a fairer tax and regulatory system “by ensuring the majority of Australians that are doing the right thing are not disadvantaged in comparison with entities seeking to avoid their obligations”.

Australian payment landscape

Like many advanced economies, cash use in Australia increasingly being replaced with various forms of electronic payments.

These alternative payment methods are often more convenient for consumers and may have lower costs, as they simplify record-keeping and avoid the security, insurance and other costs associated with handling and holding large amounts of cash.

According to the Reserve Bank of Australia’s latest consumer payment survey, cash was still used for over one-quarter of consumer payments in 2019. However, the share of cash payments measured by the value of consumer payments fell to around 10%, from just under 40% in 2007.

The shift away from cash, the central bank notes, has occurred for transactions of all sizes, including for lower-value payments.

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