20 June 2018
7 min read
#Property, Planning & Development
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Cash payment limit to bite residential building sector
The Commonwealth Government has introduced an economy-wide cash payment limit of $10,000 (the limit) as part of the 2018-19 Budget. From 1 July 2019, payments greater than $10,000 to Australian businesses for goods and services will not be able to be made using cash. This limit has been introduced in order to minimise the use of cash for tax avoidance or for laundering the proceeds of crime.
The limit
The limit will apply to transactions in excess of $10,000 made to businesses with an Australian Business Number (ABN) for goods and services. Such transactions will not be able to be made using cash. Instead, these transactions will need to be made via electronic payment system or by cheque. It will not be possible to avoid the limit by splitting the transaction into smaller cash amounts of less than $10,000 each.
Why is a limit necessary?
The Black Economy Taskforce’s Final Report of 2017 (the Final Report) identified that large, undocumented cash payments pose a significant risk to legitimate commercial practices. In particular, many businesses insist on cash being used to pay for their goods and services in order to avoid paying tax.
The 2018-19 Budget has adopted the Final Report’s recommendation to introduce a cash payment limit. Building renovations were singled out in the Final Report as a key area susceptible to large, undocumented cash payments. While the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML-CTF Act) requires reporting of cash transactions in certain sectors over the same limit, the building and construction industry, is not currently regulated by the AML-CTF Act.
What will be the implications for the residential building sector?
Both parties to a cash transaction above the limit will face penalties. The penalties will apply both to owners who seek that businesses accept cash in exchange for a discount and businesses which insist on being paid in cash to avoid paying tax. This is in contrast to the current position where the tax avoidance risk rests on the party who should be remitting.
In the lead up to the introduction of the limit, publishers of standard form contracts will need to consider the addition of consumer warnings. Parties who ignore the limit will need to consider the risk of detection should they fall into dispute and their commercial arrangements be exposed before a court or tribunal. If the penalty operates as a deterrent, then given that the practice of paying certain trades in cash is so widespread as to be baseline, the limit may put upward pressure on prices across the sector.
Considerations in establishing the cash payment limit
In deciding upon the limit of $10,000, the Treasury has observed that:
The Treasury is inviting public comment on their consultation paper. Comments must be made in writing to blackeconomy@treasury.gov.au by 24 June 2018.
Editorial: Christine Jones, Eleanor Grounds and Christopher Yong
Aussie engineers must better manage risk on retaining walls
Last November, 15 people were evacuated from their homes in the Cleveland (south of Brisbane) street of Middle street after excavators ‘dug too deeply’ at the site and an excavation collapsed (15 June 2018). More...
House price decline ‘larger than expected’
The sale of new homes in five of Australia’s largest states tumbled last month, with one of the big four bank’s predicting that weakness in the market will be graver than expected (07 June 2018). More...
Housing affordability improves across Australia: Report
Housing affordability has improved across the country despite falls in Victoria, South Australia and ACT during the first quarter of 2018, according to research from the Real Estate Institute of Australia (06 June 2018). More...
Update on the Fire Safety and External Wall Cladding Taskforce
In total, Fire & Rescue NSW has visited, inspected and assessed over 2280 sites identified through the initial audit. The Taskforce’s work to identify buildings that have been inspected and assessed and the ACP cladding remains ongoing (04 June 2018). More...
Australian Bureau of Statistics
12/06/2018 Housing Finance, Australia, April 2018 (cat no. 5609.0).
ABCC: Minimum wage increase – make sure you are paying the right rate
On Friday 1 June 2018 the Fair Work Commission announced a 3.5% increase to the minimum wage. The increase applies from the first full pay period starting on or after 1 July 2018 (05 June 2018). More...
More housing options for NSW: Low Rise Medium Density Housing Code
The new Code will allow one and two storey dual occupancies, manor houses and terraces to be built under fast-track complying development approval across NSW and also promotes good design for medium density housing. Low rise medium density housing as complying development is only allowed where medium density development is already permitted under a council’s local environmental plan. The Medium Density Housing Code will commence on 6 July 2018.
Greenfield Housing Code
The changes start on 6 July 2018, the new Code will be included in the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008. In essence, it is a simplifying of the development process, and aligning the requirements for development across greenfield areas. The planning rules and the code are also presented in plain English for clearer explanation. Note: There will be a three-year transitional period, where applicants can choose whether to use the Greenfield Code, or the new simplified Housing Code or Transitional Code (until 13 July 2019). More...
BPB: Certification data reporting commences 01 July
To strengthen certification and building regulation in NSW, accredited certifiers and local councils will soon be required to report data on building certification to the NSW Government. This will be mandatory from 1 July 2018. More...
BPB: View Cert Alert issue 3 – 08 June 2018
Read about mandatory data reporting for A1, A2 and A3 certifiers; practice advice; changes to the EP&A Act; unsafe cladding and more. More...
J Evers Pty Ltd t/as The Plumbing and Electrical Doctor v Rolt [2018] NSWCATAP 150
(3) Appeal dismissed. APPEAL – Residential building work – Whether error of law – Whether leave to appeal should be granted - Civil and Administrative Tribunal Act 2013; Civil and Administrative Tribunal Rules 2014; Home Building Act 1989.
Goodfellow v Gilchrist [2018] NSWCATAP 151
Appeal upheld; (3) he matter is remitted to the Consumer and Commercial Division for re-hearing of the application made on 24 November 2017 to set aside the decision and orders in HB 17/41814 made on 27 October 2017.
APPEAL – Application to set aside decision – Whether error of law.
Civil and Administrative Tribunal Act 2013 (NSW); Civil and Administrative Tribunal Regulation 2013 (NSW); Civil and Administrative Tribunal Rules 2014 (NSW); Home Building Act 1989 (NSW).
Statute Law (Miscellaneous Provisions) Act 2018 (NSW)
Received assent on 15 June 2018.
Home Building Act 1989 (No. 147 of 1989)
Proposed amendment by:
Statute Law (Miscellaneous Provisions) Bill 2018
Government Sector Finance Legislation (Repeal and Amendment) Bill 2018
Home Building Regulation 2014 (No. 811 of 2014)
Proposed amendment by:
Statute Law (Miscellaneous Provisions) Bill 2018
Strata Schemes Development Regulation 2016 (No. 659 of 2016)
Proposed amendment by:
Statute Law (Miscellaneous Provisions) Bill 2018
Strata Schemes Management Act 2015 (No. 50 of 2015)
Proposed amendment by:
Fair Trading Amendment (Short-term Rental Accommodation) Bill 2018
Contacts:
Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution)
T: +61 2 8083 0477
E: christine.jones@holdingredlich.com
Stefanie Dunnicliff, Senior Associate
T: +61 2 8083 0464
E: Stefanie.Dunnicliff@holdingredlich.com
Divya Chaddha, Associate
T: +61 2 8083 0457
E: Divya.Chaddha@holdingredlich.com
Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
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