Coalition Unveils $20,000 Tax Deduction to Ease Red Tape for Small Businesses

The Dutton Coalition Government has unveiled a new policy aimed squarely at reducing red tape and providing financial relief for small businesses across the nation. The plan introduces a capped tax deduction of $20,000 for business-related meal and entertainment expenses, delivering targeted support to businesses still recovering from the challenges of recent years. This initiative is a welcome measure for small business owners and local hospitality operators navigating the current economic climate.

Under this policy, businesses with an annual turnover of up to $10 million will be eligible for the deduction. Alcohol-related expenses will be excluded, ensuring the policy remains focused on legitimate business-related activities. The measure, exempt from Fringe Benefits Tax (FBT), will initially run for two years, providing an immediate lifeline to the sector and ensuring simple implementation.

Supporting Small Businesses and Local Hospitality

The announcement underscores the Coalition’s commitment to small businesses, which form the backbone of Australia’s economy. Speaking on the initiative, Leader of the Opposition Peter Dutton said the policy offers dual benefits:

“This policy is a win for everyone. It helps small businesses invest in their teams and clients while providing a much-needed boost to our cafes, restaurants and pubs – the beating heart of many local economies,” Mr Dutton said. “After three challenging years under Labor, marked by skyrocketing energy costs and rising business expenses, small businesses deserve policies that enable them to not just survive but thrive.”

Locally, Federal Member for Cowper Pat Conaghan has thrown his full support behind the initiative, highlighting its significance for small businesses in the Mid North Coast region, particularly those in hospitality.

“Hospitality businesses in our region have been doing it tough, battling rising costs and shrinking margins. This tax break will be a real game-changer for small operators, allowing them to reinvest in their staff, reward loyal customers and drive much-needed activity into their businesses,” Mr Conaghan said.

“We have incredible cafes, restaurants and pubs here in Cowper that are vital to our local economy and community spirit. This policy is about giving them the support they need to recover and thrive in a challenging economic climate.”

Hospitality: The Heart of Local Economies

Hospitality is a critical component of the Australian economy, employing more than 800,000 people and generating significant economic activity. However, the sector has been particularly hard-hit in recent years, grappling with rising costs of energy, insurance and supplies, as well as the ongoing impacts of the COVID-19 pandemic.

Deputy Leader of the Opposition Sussan Ley noted the alarming number of small businesses forced to close under the current government.

“More than 26,000 small businesses have shut their doors under Labor, including over 4,000 hospitality venues,” Ms Ley said. “This policy is designed to help small businesses rebuild, recover and create more local jobs.”

Shadow Treasurer Angus Taylor reinforced the Coalition’s commitment to responsible and practical economic policies:

“This is a responsible, targeted policy that complements our plan to make the Instant Asset Write-Off permanent. By cutting red tape, we are freeing up small businesses to focus on growth and opportunity,” Mr Taylor said.

A Simple, Sensible Policy

The capped tax deduction for meal and entertainment expenses will apply to legitimate business-related activities, such as dining and entertainment provided to clients, vendors and employees. By exempting these expenses from FBT, the policy ensures small businesses can reinvest in their operations without worrying about additional administrative burdens.

The Australian Hotels Association (AHA) has welcomed the proposal, recognising its potential to inject much-needed activity into the hospitality sector. AHA National CEO Stephen Ferguson praised the policy as a “commonsense solution” to a longstanding issue.

“This policy proposal by the Coalition is a win for common sense, especially during a cost-of-living crisis,” Mr Ferguson said. “Why shouldn’t a boss be able to take their hard-working team to the pub, shout them a meal and use it as a deduction? Everyone wins.

“The current structure of the FBT means a small business owner cannot reward their staff at a local hotel, club or restaurant without being hit with additional taxes. Yet larger corporations have workarounds, such as fully catered in-house boardroom lunches. This policy levels the playing field and supports family-owned businesses and their workers.”

What It Means for the Mid North Coast

For small businesses in Cowper, particularly those in the hospitality sector, the policy represents an opportunity to drive more foot traffic and rebuild relationships with clients and employees. Mr Conaghan highlighted the interconnected nature of local economies, where the success of one business often benefits others in the community.

“When a small business invests in hosting a client dinner or a team lunch, it’s not just that business that benefits. Local suppliers, farmers and service providers all share in the gains,” Mr Conaghan said.

“For example, a local cafe sourcing fresh produce from nearby farms is helping sustain our agricultural industry. This policy encourages that kind of activity, creating a ripple effect across the economy.”

The Broader Picture

The $20,000 tax deduction forms part of the Coalition’s broader economic plan, which includes measures such as:

• Making the Instant Asset Write-Off permanent: Allowing small businesses to continue investing in growth without the hassle of depreciation schedules.
• Lowering and simplifying taxes: Ensuring small businesses are not burdened by complex regulations.
• Focusing on job creation: Strengthening the foundations of Australia’s workforce by supporting small businesses, which are responsible for employing millions of Australians.

“Small business is in our DNA as Liberals and Nationals, and we want to help those businesses survive Labor’s time in office and thrive when we get back into government,” Mr Dutton said.

Looking Ahead

The Coalition’s proposed tax deduction has the potential to provide significant relief to small businesses and revitalise the hospitality sector. By cutting red tape and offering targeted support, the policy ensures small businesses can focus on what they do best: driving innovation, creating jobs and fostering vibrant local communities.

As the policy takes shape, Mr Conaghan is urging local business owners to voice their thoughts and share their experiences.

“We want to ensure this policy delivers the best possible outcomes for small businesses and the hospitality sector,” Mr Conaghan said. “I encourage all business owners to reach out to my office with their feedback or questions.”