Dutton’s staff lunch tax break too easy to rort
By simply grabbing a $99 ABN, anyone could jump in and claim a great day of leisure, claims Michael O’Neil. But that won’t help small businesses.
The recently announced Coalition policy to allow for “business entertainment expenses” as a tax deduction, including work-related meals, rounds of golf, attending football matches and the movies, is surely one of the worst policy proposals ever put forward to the Australian public.
The proposed policy quarantines the tax deductions for businesses with an annual turnover of less than $10m, then allows deductions of up to $20,000 per tax year.
Besides the presumption that the ATO will immediately ask for more staff to police this policy (so much for small and efficient government), the proposed policy is potentially unfair, inequitable and very easy to rort. Here is how:
1) Any individual can apply to get an Australian Business Number (ABN). Cost you $99.
2) Set up a company by name: XYZ Consulting (you could call yourself an ‘influencer’ specialising in recommending house décor)
3) Meet your “business” mates at a café in the morning for coffee/breakfast, to discuss trendy colours that are in vogue (Tax deduction 1)
4) Meet your brother (he is a business advisor/employee as well) for a game of golf, then lunch at the club – noting that you cannot charge alcohol consumed. (Tax deduction 2)
5) Meet other “business partners” to take in an afternoon movie (Tax deduction 3)
6) After the movie, adjourn to your favourite restaurant for dinner prior to the big game (Tax deduction 4)
Stay informed, daily
7) Catch a taxi to the footy ground (as you had one or two alcoholic drinks which were not tax deductible) although the bottles of sparkling water are deductible (Tax deductions 5 and 6)
8) Footy has returned. Meet another “business partner” and attend the game, discussing business at half-time. (Tax deduction 7).
You might even try for a tax deduction for your golf clubs, (especially if had to hire them, cost of doing business hey), football club membership and more, arguing that these represent legitimate tax deductions to enable you to play golf and importance of obtaining favourable seating at the footy to be able to discuss business related issues.
You think I’m joking. I’m not. I renewed my ABN yesterday!
Really, if this was not true you would think it a joke. The only sector this policy will help is tax accountants.
If this is the best Dutton and Angus Taylor can do to assist small business via the tax system they should resign.
How about reducing the rate of excise on alcohol sold by restaurants and bars to below the going rate of inflation to encourage diners?
It would reduce the cost of lunch with alcohol. It would have a very small impact on the Commonwealth Budget. It would assist many in the hospitality sector and it is easy to implement.
Associate Professor Michael O’Neil is an Honorary Research Fellow at the SA Centre for Economic Studies and the University of Adelaide.
