"There's always a balance in these issues but it is a very small area of the economy that walks around with $10,000 in a briefcase for a cash transaction for a single service or item.

"You have got to ask questions about why anyone would be doing that."

The government's black-economy taskforce estimates that illegal activity could be worth as much as 3 per cent of GDP, costing the Australian economy up to $50 billion a year.

But minor party MPs have spoken out against the plan this week.

Queensland MP Bob Katter said it represented a danger to Australian freedoms that is "greater than the danger to our lives through terrorism’’.

He quoted George Orwell's 1984 and the Magna Carta, while also raising concerns about Chinese surveillance measures.

“Clearly there are a thousand reasons why people like to hide a little bit of wealth and have access to cash,” Mr Katter said.

One Nation Queensland senator Malcolm Roberts said his party would oppose the plan.


"Legal tender is legal tender," he said.

The cash payment cap will help crack down on criminals, syndicates and illicit tobacco traders and limit under-reporting of income and GST.

Exempt transactions will include cash deposits and withdrawals from individuals' bank accounts, foreign currency exchanges and "consumer to consumer" transactions such as selling a second-hand car.

The cash limit would apply to real estate property transactions.

Big four firm KPMG has told Treasury the cap should have a lower threshold, restating calls for a $5000 or $2000 cap and proposing a timetable for the reduction via government regulation, rather than a change in Parliament.

"The black economy is a significant cost to society, government revenue and services, and a haven for some of the most egregious criminals," the firm said.

"The government should set the [cash payment limit] at a lower level. At the very least the legislation should allow scope for the limit to be reduced over time via legislative instrument or regulation, rather than via a change to the legislation itself."

Australia is behind other countries on cash limits. France instituted a €1000 ($1600) threshold in September 2015. Spain has a limit of €2500 and Italy €3000.