The Morrison government is proposing a radical ban on business cash transactions over $10,000 to fight the 'black economy' and tax avoidance.

Business owners will face two years jail and fines up to $25,000 for accepting payment for goods and services worth over $10,000 with cash.

But the government is not proposing a complete ban on cash transactions over $10,000.

Transactions that are exempt from this ban include consumer to consumer payments (like buying a second-hand car) but not transactions involving real property (houses, land, real estate). Also exempt are withdrawals and deposits to and from banks and credit unions. Exchanging foreign currency is also allowed.

The exemptions haven't silenced some very loud critics, including respected market economist Martin North from Digital Finance Analytics.

"This law will not stop tax avoidance, because the bulk of that is being done by corporates," Martin North told InfoChoice.

"And it limits the personal freedom of Australians."

Martin North said the $10,000 threshold can be changed by regulation and need not be voted on again by parliament. And already there are calls to lower the $10,000 threshold.

"The [government's black economy] taskforce recommended $10,000 because it fits with [money laundering] legislation," KPMG Partner Grant Wardell-Johnson told the Australian Financial Review.

"Our view is to accept $10,000 at this juncture but there's a prospect of lowering that in the future as people find this more acceptable."

The threshold should be lowered to $5,000 or even $2,000 said Mr Wardell-Johnson.

For Martin North, those comments confirm his suspicions that this law is the latest step in a long-term government project to ban cash completely.

"$10,000 sounds like a lot of money but it can be lowered very easily once the law is passed," said Mr North.

Meanwhile, Australians are hoarding extraordinary amounts of cash in large denomination bills, especially $50 and $100 notes, the Reserve Bank reports. As at 31 December 2018, there was $76 billion in Australian notes and coins in circulation. 93 per cent of that total was $50 and $100 notes.

But only about 15 to 35 per cent of that $76 billion worth of banknotes and coins are being used for legitimate transactions, the RBA has loosely estimated. The rest is being kept outside the banking system or is being used by criminals while up to 10 per cent of all banknotes are lost or destroyed.

Martin North says the government is rushing this law through and is concerned that there has not been enough public discussion or consultation.

"This is big limitation on the personal freedom of Australians and I'm concerned that there hasn't been much coverage of this in the media."

However, there has been plenty of coverage on social media of claims the government has a secret agenda to lock Australians into banks, then ban cash entirely.

Aussies are being forced into the banking system prior to the government implementing negative interest rates, according to a viral conspiracy theory circulating on social media in the last two weeks.

"Negative interest rates only work if people are tied into the banking system," said Martin North.

As interest rates edge closer to zero, many economists have raised and discussed the possibility of interest rates going negative. That means that money held in banks and credit unions would not attract extra interest but would have interest subtracted from the balance. That would place pressure on banks, as savers and depositors might rush to withdraw their money to avoid negative rates.

The Treasury declined to make a comment.

Anyone wanting to have their say and make a submission to the government's Currency (Restrictions on the Use of Cash) Bill 2019 consultation process must act quickly. The deadline for submissions is Monday 12 August 2019. All submissions must follow the submission guidelines.