Tax plan to combat food waste must be scaled up, government told
Current limits for the Food Donations Tax Offset exclude most of the nation’s top 100 manufacturers, CPA Australia has said.
CPA Australia has called on the government to expand its proposed tax incentives for food donations, warning that current threshold requirements will hamper efforts to halve food waste by 2030.
In a recent submission to the Treasury, the professional body said threshold requirements to access the National Food Donation Tax Incentive were too restrictive and risked excluding major manufacturers that accounted for the bulk of the industry’s production and waste.
The proposed law, introduced in July, offers tiered tax offsets ranging from 30 per cent to 45 per cent for companies donating food to registered charities.
To be eligible for a tax break, companies must be engaged in donating or selling food to registered charities or providing services to charities in relation to food donation and have a receipt from the charities concerned.
The offset covers the costs incurred by the company in its food donation activities in an income year, capped at the lower of $5 million or a percentage of the food donation costs based on the company’s aggregate turnover.
For companies with a turnover of less than $20 million, the incentive offers a refundable offset of 45 per cent of costs incurred.
Companies with a turnover of $20 million or more but less than $50 million are eligible for a non-refundable offset of 40 per cent of costs incurred, while those with a turnover of $50 million or more are eligible for a non-refundable offset of 30 per cent of their costs.
CPA Australia supported the bill, which was “particularly timely given the current economic climate, where rising living costs are exacerbating food insecurity across Australia”.
“We commend the targeted nature of this incentive, which focusses relief efforts on those in need through the donation of food and related activities to food relief organisations.”
But chief of policy Elinor Kasapidis said the “associate-inclusive” definition of turnover used could prevent many Australian companies from accessing the tax offset. The definition includes turnover from all connected entities and affiliates, including foreign entities.
“A small Australian entity with foreign ownership could easily exceed the $50 million aggregated turnover threshold,” the submission said.
It that even scaling up the threshold by fivefold to $250 million “could still be relatively easy for such entities to breach, potentially limiting access to the offset only for smaller, domestically owned food donors”.
CPA Australia cited statistics that showed that Australia’s top 100 food manufacturers accounted for 75 per cent of food manufacturing, and over 80 per cent had turnovers over $250 million.
The accounting body recommended simplifying the system to two tiers: a 45 per cent offset for companies with turnovers under $20 million, and 40 per cent for those above.
The current proposal’s 30 per cent tier for larger companies would “not make any difference to the outcome to the taxpayer” given the corporate tax rate was already 30 per cent.
If an aggregated turnover limit had to be retained, CPA Australia recommended setting the maximum threshold at a “significantly higher level” like $5 billion.
The Senate committee tasked with reviewing the offset, introduced by Liberal senator Dean Smith as a private members bill, advised against its passage in a report last week.
The Coalition, however, has called for further changes to the bill address concerns raised during the hearings.
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