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: failing to withhold PAYG makes you liable for a penalty equal to the amount you should have withheld (Taxation Administration Act 1953 Sch 1 s16-30), it is also an offence, and you lose the deduction for those wages; unpaid or late super attracts the super guarantee charge (from 1 July 2026: the shortfall, notional earnings at the general interest charge rate and an administrative uplift of up to 60%); Fair Work civil penalties up to A$21,840 per contravention for individuals, A$109,200 for a body corporate that is a small business employer, or A$546,000 for a body corporate with 15 or more employees (from 1 July 2026); and since 1 January 2025 intentional underpayment of wages is a federal criminal offence (Fair Work Act s327A) carrying up to 10 years' imprisonment. 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) if you withdraw $10,000 or more in cash, your bank lodges a threshold transaction report with AUSTRAC (AML/CTF Act s43) — you don't lodge anything, but splitting withdrawals into smaller amounts to avoid the report is an offence (structuring, s142); (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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