Question 1

Is it legal to pay an employee in cash in Australia?

Accepted Answer

Yes — cash payment is a legal payment method in Australia. What makes 'cash in hand' illegal isn't the cash itself, it's skipping the surrounding compliance: PAYG withholding, superannuation guarantee, Single Touch Payroll reporting, payslips, and 7-year record-keeping. If you do all six of those AND pay in cash, you're 100% legal. If you skip any of them — whether you pay in cash, EFT or bitcoin — you're breaching tax and Fair Work law.

Question 2

What are the penalties for paying cash in hand illegally?

Accepted Answer

Multiple stacked penalties: ATO charges the unpaid PAYG plus interest plus penalty up to 75% of the shortfall; Superannuation Guarantee Charge for unpaid super (interest + admin fee per quarter + loss of tax deduction); Fair Work civil penalties up to A$21,840 per contravention for individuals (A$109,200 for body corporate (small business employer; $546,000 for a body corporate with 15 or more employees)s) from 1 July 2026; criminal wage-theft charges in some states (since 2025) carrying imprisonment for systematic underpayment. The ATO's data-matching across STP + bank transactions makes cash-in-hand much easier to detect than people assume.

Question 3

Is there a maximum cash payment amount in Australia?

Accepted Answer

No legal maximum per cash payment to an employee, but two trigger points to know: (1) AUSTRAC's $10,000 Threshold Transaction Reporting kicks in for any single cash payment of $10,000 or more — both your bank and you must report it within 10 business days; (2) the proposed but not-yet-enacted Currency (Restrictions on the Use of Cash) Bill 2019 would have banned cash payments over $10,000 entirely. As of May 2026 it's not in force.

Question 4

Can I run a compliant cash payroll without payroll software?

Accepted Answer

Technically yes, but Single Touch Payroll reporting is mandatory and almost impossible to do manually. Free micro-employer STP options exist (Reckon Payroll Free) and basic paid options start at $15-25/month. Most cash-paying employers use software to handle STP + payslips + super + leave automatically, then physically pay in cash at the end. The cash part is the easy bit — the compliance reporting is what trips people up.

Can I Pay My Employee Cash?

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