Hello Chasers,
The clinking of glasses, the murmur of conversation, the aroma of delicious food – these are the hallmarks of a thriving hospitality scene. But in recent times, Australia’s restaurants, cafes, and bars have faced a perfect storm of challenges. The lingering impact of the pandemic, coupled with rising costs and evolving consumer habits, has left many businesses struggling to keep their doors open.
The Coalition’s proposed tax incentive announced last week (a generous $20,000 deduction for small businesses on meal and entertainment expenses) could be just the boost that this struggling sector could benefit tremendously from. This bold move aims to breathe new life into the industry, encouraging Australians to dine out and support their local businesses.
It also echoes a time when the taxman was a little more lenient on wining and dining. Way back in 1985, some two years after a very green accountant graduated, I can vividly remember and quote Section 51AE(5) of the Income Tax Assessment Act, the section of the Tax Act that recognised the role of hospitality in doing business. It allowed deductions for expenses like providing light refreshments to employees on work premises and for entertainment that was incidental to a business meeting. This policy clearly understood the simple fact that quite often, business deals are best struck over a good meal.
While those rules were tightened in 1985, the spirit of the new proposal is similar. It acknowledges that hospitality is more than just a meal; it’s about fostering connections, building relationships, and creating experiences. By reducing the tax burden on small businesses, the Coalition hopes to stimulate spending and revitalise the hospitality industry.
Imagine this: a local business owner can now deduct the cost of catering a client meeting, a restaurant can claim back expenses for hosting a team-building event, or a small bar can write off the cost of providing snacks at a networking function. This not only eases financial pressure but also incentivises businesses to invest in creating memorable experiences for their customers.
The benefits extend beyond the bottom line. Increased spending in hospitality translates to more jobs, a boost to local economies, and a vibrant social scene. It’s about bringing people together, fostering community, and supporting the businesses that make our towns and cities come alive.
Obviously, from the view of an accountant, more detail will be required to show how this incentive will interact with other tax laws like GST and Fringe Benefits Tax, which currently deny a tax credit or imposed more tax on the employer
This tax incentive is a gamble, a bet on the resilience and ingenuity of Australian businesses. It’s a recognition that sometimes, a little bit of help can go a long way in reviving a struggling sector. And who knows, maybe this is the shot in the arm that our hospitality industry needs to not just survive, but truly thrive.
I support this initiative and look forward to it’s implementation if the Coalition win Government.
What do you think?
Have a great day!
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