Small businesses could soon benefit from tax-free lunches, thanks to a new proposal aimed at supporting the sector. The plan, unveiled at a Brisbane event, suggests allowing small businesses to claim tax deductions for meals and entertainment expenses related to staff or clients.
What’s the deal?
Under the plan, businesses with a turnover of less than $10 million could deduct up to $20,000 annually on work-related dining or entertainment expenses. Think client lunches, team dinners, or even golf trips – but no alcohol, Dutton clarified. “This policy is a win-win. It helps small businesses thrive and rewards employees,” Mr. Dutton said.
The scheme would also sidestep fringe benefits tax for two years, a move he claimed would cut red tape and ease financial pressure on businesses hit hard by rising costs. Small business and hospitality groups welcomed the initiative, seeing it as a potential boost for restaurants, cafes, and local entertainment venues.
However, compliance might get tricky. Businesses would need to keep receipts and follow guidelines from the Australian Taxation Office (ATO) on what qualifies as a legitimate “entertainment expense.” Some experts have raised concerns about integrity risks and the need for clear definitions to prevent misuse.
What else is in the offering?
This tax-free lunch proposal isn’t the only sweetener from the Coalition. Other promises include:
- Permanently extending the instant asset tax write-off for small businesses.
- Boosting the write-off threshold from $20,000 to $30,000.
Albanese’s Big Spending Focus
While Dutton was pitching tax relief, the PM was in Sydney announcing a $500 million upgrade to Fifteenth Avenue, a critical connection to Western Sydney Airport. Matched by the NSW government, the project is part of a broader infrastructure blitz, including a $7 billion Bruce Highway upgrade and $3 billion for NBN investments. “My government is focused on building opportunities for Australians, not sugar-hit policies,” Mr. Albanese said.
The Battle Over Cost-of-Living
Dutton has attacked Labor’s cost-of-living strategies, labeling their energy relief plan a “sugar hit” that won’t address inflation. Instead, he vowed to cut public spending, starting with slashing 36,000 public service jobs created under Labor. But critics, including Public Service Minister Katy Gallagher, argue such cuts would cripple government services and hurt Australians who rely on them. For SMEs, the idea of tax-free lunches might sound appealing – who doesn’t love a tax break? But with compliance requirements and potential risks, it’s worth watching how this policy plays out in the lead-up to the election. As the major parties continue their war of words, small businesses will no doubt be hoping for real, tangible support rather than political promises.
A “shot in the arm” for SMEs, says COSBOA
Peter Dutton’s promise to make business lunches tax-free is gaining traction, with The Council of Small Business Organisations Australia (COSBOA) throwing its support behind the proposal. COSBOA CEO Luke Achterstraat has welcomed the move, calling it a much-needed boost for small businesses, especially in hospitality, which has been struggling with rising costs and record insolvencies.
“This announcement comes at a critical time for hospitality and will provide a real ‘shot in the arm’ for small businesses facing a tough operating environment,” Mr. Achterstraat said.
He explained that the policy could encourage Australians to reconnect with local restaurants, cafes, and other entertainment venues by offering real financial incentives to do so. “If you want more of something, then you should tax it less,” he said.
“This tax deduction will encourage people to back their local hospitality businesses. 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.”
Cutting red tape for SMEs
The COSBOA CEO also highlighted the policy’s potential to ease administrative burdens on business owners. “The initiative provides a reduction in red tape for small businesses, avoiding duplication with navigating the Fringe Benefits Tax system,” he said. “In such a complex regulatory environment, the less time spent on duplicating paperwork, the better.” For small business owners, particularly those already grappling with high costs, the tax deduction would enable them to focus on their operations instead of bureaucracy.
The tax deduction policy, outlined by Mr. Dutton in Brisbane, would apply to businesses with a turnover below $10 million and cover up to $20,000 annually for dining or entertainment expenses. Alcohol, however, would not be deductible. Dutton described the plan as a “win-win,” claiming it would help retain employees and support struggling hospitality businesses.
COSBOA believes this targeted initiative reflects the leadership small businesses are looking for ahead of the next federal election. With 2.5 million small business owners in Australia, many are at a crossroads and keenly watching how major parties plan to support them. “Without significant support for the engine room of the economy, our economy will see fewer small businesses operating, reduced competition, productivity, and be stuck with higher prices for longer,” Mr. Achterstraat said. Small business groups have been vocal about the pressures they face, from high inflation to increased operating costs. Initiatives like the tax-free lunch proposal are seen as tangible ways to empower these businesses to survive and thrive.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
