Australia's FBT system could look similar to New Zealand's, depending on the general election result later this year.
A recent proposal by the Restaurant and Catering Association of Australia regarding the fringe benefit tax was recently adopted as an election policy by the Coalition opposition.
This would bring the Australian sector to a similar position as its New Zealand counterpart.
Hospitality New Zealand Chief Executive Steve Armitage said most business-related expenses, such as a business lunch, were already 100 percent tax deductible.
“While IRD guidelines around what activities may incur fringe benefit tax are already fairly clear, there isn’t a direct link drawn to benefitting hospitality – likely because the current rules already align with what is being proposed by Australia’s Coalition party," said Armitage.
There are three major types of business entertainment expenses under the FBT that businesses may be subject to. It has been advised that business owners stay up to date on what they expenses may be partially or fully tax deductible.
If elected, the Australian coalition has committed to introducing a AUD $20,000 tax deduction for small business lunches, which would likely benefit the hospitality industry.
Restaurant and Catering Australia CEO, Suresh Manickam, said that there was potential impact that the policy could have on the hospitality sector.
"This FBT policy is a win-win, encouraging businesses to invest in their staff or clients while driving increased patronage and spending at hospitality venues," said Manickam.
Especially in the post-COVID climate, which has left the hospitality sector in an uncomfortable position, the FBT deduction would have a far greater impact on smaller and medium-sized businesses that have suffered the most in the past five years.
The Australian proposal has hoped to drive strong economic recovery, while providing essential support to small businesses across the industry.
“The cost-of-living crisis coupled with skyrocketing energy costs mean that hospitality owners are already struggling with skyrocketing costs, this proposal adds another unnecessary hurdle, making it even tougher to succeed."
Restaurant and Catering Association of Australia has stated it hoped the ALP would consider adopting the policy as well.
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