The Turnbull government wants to tackle what it calls the "black economy" and claw back billions in lost tax revenue as a result of undeclared cash payments.
"There's nothing wrong with cash ... the issue is when people don't declare it," Financial Services Minister Kelly O'Dwyer said on ABC radio on Wednesday.
A new taskforce will be launched, to be headed up by former KPMG global chairman Michael Andrew, and it will also examine whether to put an end to the $100 note.
"We know increasingly that people are using electronic payments and yet there are about $50 billion worth of $100 notes in circulation," Ms O'Dwyer said.
"In fact, there are three times as many $100 notes in circulation as there are $5 notes in circulation, and it does beg the question, why?
"We're putting together this task force which is the first time a government has put together a whole of government response."
The resources of the ATO, the Reserve Bank of Australia, Austrac and Apra will be called upon to track down the billions of dollars in unpaid tax revenue.
Minister O'Dwyer won't speculate on exactly how much in unpaid tax dollars the government wants to claw back as a result of the taskforce, nor whether any modelling had been done on an estimated return.
"We want to be at the forefront of ensuring that the honest Australian citizen is receiving their fair share of tax," she said.
"There's nothing wrong with people being paid cash so long as they declare it. Those who claim welfare payments while doing small cash jobs on the side are in the government's sights.
"That's simply wrong, it's fraudulent [and] it's not right and it shouldn't be allowed to continue."
France has banned cash payments over 1000 Euros, which is an idea the minister said would be examined.
"We want them to look at the international experience and see what works and we will look at the very best case for Australia."
