Tonight, the Hon Josh Frydenberg will deliver his fourth national budget in advance of the Federal Election. During the state election campaign, the South Australian Business Chamber called for action on priority business issues such as investment in skills development and reducing payroll tax. At the State level, these are within the control of the government of the day. However, there are other responsibilities at the national level, such as federal taxation laws. In 1986, the Fringe Benefits Tax Act (1986) commenced in Australia and changed how we did business across the nation. Meal and entertainment expenses were subject to taxation, significantly impacting the hospitality sector.
Across the global pandemic, the density restrictions on hospitality venues were an effective strategy to stop the spread and enable business owners to keep their doors open. But it had a considerable impact on the profitability of the hospitality sector. The South Australian Business Chamber members have often shared how it was not financially viable even to open their doors but did so because of their staff. They knew that closing meant no wages for their team. The support and stimulus packages from the former Marshall Liberal Government were a welcome relief for those hardest hit, especially in the CBD.
We now look to our federal leaders in Canberra to listen to the business community. We need them to hear the calls from city traders from all over Australia that have struggled because of work from protracted home orders across public and private sectors. While we represent businesses all across South Australia, we are necessarily vocal at the moment in support of city traders. It is a fact that capital cities are the engine rooms of all state economies, and we need further stimulus to get people back spending in the cities.
A waiver of the FBT as it applies to entertainment expenses is one obvious and effective method to stimulate demand when it is most needed. On behalf of our members and the broader South Australian business community, we have repeatedly called on the Federal Treasurer to place a temporary waiver on FBT as a measure of support for Australia’s hard-hit hospitality sector. FBT is not about high-flying business executives enjoying a long lunch with clients. It is about regenerating demand for dining, conferencing and networking within the business sector as part of their effective business development strategies. It is also about reconnecting people and building relationships after a long period of isolation.
The FBT goes broader than just hospitality. It is for business expenses such as travel, accommodation and entertainment. We have called on the Federal Treasurer to consider a short-term waiver of this tax, say 12 – 24 months. We estimate that South Australia collects approximately $25m in FBT revenues associated with meal and entertainment expenses annually. Forgoing this for only a couple of years is a comparatively small investment to protect many of the 60,000 plus jobs in South Australia’s hospitality and tourism sectors. It also effectively supports the thousands of businesses that supply products and services to our cafes, hotels, restaurants, and function centres.
Federal Treasurer, we hope you have heard our call.
