Former Liberal ACT chief minister and now the Australian Small Business and Family Enterprise Ombudsman Kate Carnell has urged the Federal Government to abolish fringe benefits tax and it has full support of the Queensland pub industry.
The FBT was introduced by the Hawke government and designed to tax the perks of business like company cars, paid school fees and the long lunch.
It devastated restaurants for years and Carnell said suspending it for two years would bring in a much- needed cash flow boost to the economy and support struggling small businesses.
The Restaurant and Caterers Association said times had changed, that the boozy lunch was dead and the FBT had done its job of boosting productivity.
“There’s still an element of that (long lunch) but it’s in the minority because the culture has changed. It’s a different business landscape,” R&CA’s Tom Green said.
He said it was the one legislative change that the Federal Government could make that would benefit the industry.
Queensland Hotels Association chief executive Bernie Hogan said his organisation backed the move but wanted a threshold of perhaps $2000.
“We have an opportunity here to have something that could work right across Australia,” Hogan told InQueensland
“It’s really not about bringing back the boozy lunch because those things went in-house. Instead of having lunches the professional service firms have their own chefs these days,” Hogan said.
“A $10,000 (tax bill) means nothing to BHP but it means a lot to small business.
“If we could remove it, or put in a threshold, it could be used to reward staff and utilise pubs and restaurants and cafes. ”
The Chamber of Commerce and Industry Queensland economist Jack Baxter said the FBT was well-intentioned in preventing tax avoidance by companies but is now yet another cost to employers.
“What is particularly inefficient about FBT is the consequential outcomes for discretionary sectors, making it timely for a holistic review of the taxation system in Queensland and Australia,” Baxter said.
“It’s of CCIQ’s belief that the tax relief agenda should not stop at just FBT. Several disincentivising taxes make a strong argument for holistic reform, including the payroll tax, transfer duties and customs duties to name a few.”
In a letter to Treasurer Josh Frydenberg, Carnell small businesses were unfairly impacted by the fringe benefits tax.
“As it stands, small businesses are required to pay FBT on items that large businesses often provide in-house to retain staff such as meals, gyms and childcare centres,” she said.
“Larger businesses can actually claim some services as business expenses, without paying FBT. “But small businesses that provide the same benefits to their teams offsite have to pay FBT.
“A the same time, high rates of FBT acts as a disincentive to businesses spending with small businesses, particularly those in the hospitality and tourism sectors which are hurting the most right now.
“A weekend away, lunch at a restaurant or a team bonding game of golf, all attract FBT.
“FBT is discouraging businesses from spending with small businesses, which reduces the amount of money flowing into the economy.
“Fringe benefits tax accounted for less than 1 per cent of government revenue in 2019/2020 and that figure is likely to be even less in the current financial year due to the economic downturn.
“Abolishing the FBT would cost no more than $4 billion a year to the Government but it would be an effective support measure for small businesses and also stimulate cash flow into the economy at a time when we need it most.
“EY modelling done on behalf of Tourism Accommodation Australia (TAA) and the Australian Hotels Association (AHA) indicates suspending FBT on accommodation, meals and beverages alone, would produce economic returns of up to 3.8 times the direct cost to Government.”Jump to next article