The Coalition’s small businesses tax discount plan: explained

The Coalition has pledged to give small businesses up to $20,000 in tax discounts to pay for meals and entertainment for staff and clients.

Under the election promise, businesses with a turnover of up to $10 million a year could claim the deductions.

The Labor Government has accused Opposition Leader Peter Dutton of failing to work out how much the policy would cost.

Announcement

Australia is due to have an election by 17 May, though the exact date is unknown. Both major parties have begun outlining the policies they will enact if elected.

This weekend, the Coalition announced that if elected, it would give businesses with an annual turnover of less than $10 million a $20,000 tax discount for meals and entertainment.show this would cover 98% of Australian businesses.

Thewould cover expenses including meals for a company’s staff or clients, though it excludes alcohol.

These expenses wouldn’t fall under the Fringe Benefits Tax, which covers non-salary employee expenses like parking or gym memberships.

In a campaign address in outer-suburban Brisbane,said his policy would allow small businesses to “spend more at their local cafes, clubs and pubs”.

“It means the builder with five or six of his or her tradies can go down to a local restaurant, or to a local pub… to celebrate a week of hard work.“

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If the Coalition wins the election, it would roll out the policy over two years.

Reaction

Peak body the Council of Small Business Organisations Australia has welcomed the Coalition’s proposal.

“If you want more of something, then you should tax it less. This tax deduction will encourage people to back their local hospitality business by providing a real financial incentive to do so,” CEO Luke Achterstraat said in a statement to TDA.

“We hope to see many small businesses utilise the potential scheme to reward their hardworking employees and to engage with their clients to strengthen relationships.”

Government response

When asked about the policy yesterday, Prime Minister Anthony Albanese said Dutton “is yet to come out with serious policy announcements.”

Senior Labor Minister Clare O’Neil said the tax discount had not been “costed” — an independent estimate of a policy’s impact on the economy.

“Hard-working tax dollars will be subsidising business lunches,” O’Neil told the ABC.