A SYDNEY small business owner claims the government’s ban on cash payments over $10,000 will “demolish” the company he has spent four years and half a million dollars building, leaving it “worthless overnight”.

In Tuesday’s Budget, the government announced it would ban cash payments to businesses for goods and services over $10,000 as part of a broader crackdown on the $50 billion “black economy”.

The change will take effect from July 1, 2019, after which transactions over the threshold will have to be made through electronic transfer or by cheque. Paul Thomas, owner of Commander Security Services, Bankstown in Sydney’s west, believes the move will effectively kill off the cash-in-transit industry.

“It’s going to screw me — 95 per cent of my business is cash collections,” Mr Thomas said. “On a monthly basis, we could process and move up to $4-5 million — either picking up cash, processing and EFT-ing it to customers’ accounts, or recarrying it from customers to their bank branch.”

The 40-year-old said he had around 50 to 60 customers, nearly half of which were car yards. “All of my customers are legit operators, high-end car yards, money transfer depot stations,” he said.

Mr Thomas says the $10,000 limit will cause some businesses to stop accepting cash altogether, eliminating the need for armoured vans and security guards, with courier companies able to transport paperwork to banks.

He doesn’t accept Treasurer Scott Morrison’s claim that the move will be “bad news for criminal gangs, terrorists and those who are just trying to cheat on their tax or get a discount for letting someone else cheat on their tax”.

He argues the existing money laundering watchdog, the Australian Transaction Reports and Analysis Centre, was “put in place for this very reason” and was “not being used to its full extent”.

“At the end of the day it should be the discretion of the person,” he said. “If they’ve got the cash and it’s by legitimate means, they should be allowed to buy things with it. It’s legal tender.”

Mr Thomas said he had spoken to at least three other small businesses in his industry who were concerned but added: “Whether they openly admit it like I am. It basically is a life-and-death thing for me.

“I have a fleet of two armoured and five soft-skin vehicles, I employ three full-timers and two casuals, I’ve spent $300,000 of my personal money and blood, sweat and tears which I would never be able to get back if this goes ahead.”

He has written to his local member, Liberal MP Angus Taylor, and says he will reach out to Labor and One Nation Senator Pauline Hanson.

“I would be pursuing compensation,” he said. “It’s a struggle as it is to run your own business, with the cost of everything to keep it alive. I’ve struggled through, I’m still alive, now I’m being kicked in the teeth.”

Revenue and Financial Services Minister Kelly O’Dwyer, who has led the Government’s cash crackdown, was unmoved.

“If what he said is correct, it is proof positive of the need for the Government to take strong action on the black economy,” she said, while stressing she could not comment on individual circumstances.

A spokesman for Ms O’Dwyer added that the Government would be consulting on the scope of the measure over the coming days and “welcomes any comments from people affected by this measure”. A consultation paper will be released shortly.

On Tuesday, the Government announced an additional $318.5 million in funding to create the new multi-agency Black Economy Standing Taskforce, which it expects to bring in an extra $3 billion in revenue over the next four years.

The group will continue the work of the existing Black Economy Taskforce, which made a number of recommendations in its final report including the cash payment limit. “There is a strong sense of community outrage at the inequality and unfair disadvantage created by the black economy,” chair Michael Andrew said.

“I hope that by creating an efficient, level playing field we can lower taxes, treat all businesses and workers fairly, increase community services or reduce debt if all Australians operate within the rules.”

In its response, released on Budget night, the Government said it agreed with or supported the majority of the recommendations, including potentially requiring wages to be paid into bank accounts, effectively outlawing cash-in-hand payments.

The Government said it was “encouraging the transition to a digital society”. While cash would “still remain a legitimate means of purchasing goods and services”, advances in digital technology were increasingly providing a viable alternative.

“Electronic transactions also offer a number of benefits for Australians, often being safer, easier and more cost-effective,” it said. “Consumer preferences are already driving this change with Australians being amongst the highest users of digital transactions in the world.”

Cash payments have fallen from 69 per cent of Australian transactions in 2007 to just 37 per cent in 2016, and Aussies are the world’s biggest users of tap-and-go technology.

“Despite Australians embracing this change, there is a small cohort of people who continue to rely on cash to enable or fund their participation in the black economy,” the response said.

“Australia is not alone in contemplating a cash limit. A number of other countries such as France, Portugal, Greece, Spain, Italy and Belgium have cash limits varying from $1600 to $4800. Israel and the UK have also been reported to be contemplating or consulting on cash limits.”

frank.chung@news.com.au