AHA Voice: Why the government needs to freeze Fringe Benefit Tax

Why the government needs to freeze Fringe Benefi t Tax

During the worst year in living memory for our industry, the Australian Hotels Association and partners at Tourism Accommodation Australia have been working to keep member issues at the forefront of policy makers minds in Canberra.

Each state has its own unique set of circumstances and the diff erences between them sometimes seem to widen each day. TAA and AHA’s state CEOs and Presidents have worked tirelessly on localised responses in each state and territory and the whole organisation has been working toward nationwide solutions. Our eff orts to open hospitality

Stephen Ferguson CEO, Australian Hotels Association

venues and accommodation hotels as soon as possible those still caught up in the pandemic have been critical.

We all know it has been a tough year, but we have chalked up some successes against all the odds. When it comes to the important area of industrial relations, we moved rapidly to

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negotiate agreed fl exibilities with the United Workers Union in relation to the Hospitality Industry Award. This commonsense approach was recognised by the Att orney-General in the Federal Parliament.

Regarding JobKeeper, we were successful in securing a sixmonth extension of the scheme. Success has many fathers, but Treasury acknowledges the AHA submission and other weekly sector specifi c and gain extra support for

data we provided at the time helped win that argument.

We off ered solutions not just complaints. And backed it with the fi nancial resources of our associations. The modelling done by Ernst & Young laid out the actual case for continued support in crystal clear terms along with stats and forecasting reiterating how far behind we are trading in all states.

Aft er the initial JobKeeper extension was announced, the AHA went back and helped secure further easing of the Business Turnover Test and extension of the Employee Eligibility start date to July 1.

We then turned our att ention to commercial areas such as the Commercial Leasing Principles, bank deferrals and insolvency COVIDSafe harbour provisions.

At the time of writing, with murmurings of a federal election at the end of next year, we are focused on our request to suspend the Fringe Benefi t Tax (FBT) for three years on meals and accommodation expenses (we are not seeking to remove it on alcohol).

This will give a much-needed boost to hospitality and stimulate recovery as the FBT unfairly penalises members and increases compliance costs.

Since 1986, meals at hotels have att racted an FBT of 46.5 percent and, in the meantime, those at the big end of town have long since shift ed towards their own boardrooms to continue corporate lunches (which don’t att ract FBT), leaving hotels and restaurants to suff er.

The benefi ts of a removal of the FBT are obvious. Economic modelling by EY shows:

Impact on GDP, ranging from $408m to $850m.

Impact on employment FTE, ranging from 2,911 to 4,230.

GDP per dollar of cost to government, ranging from $1.89 to $3.81

There’s no doubt changes to FBT on meals and accommodation would benefi t members, see an increase in the number of business meals in Australian hotels (create jobs in the struggling hotel industry) and, by extension, provide a boost to the Australian economy when it needs it most.

With hotels experiencing substantial downturn in sales, venues closing, unemployment modelled above six percent for years to come and consumers’ ability and/or willingness to spend curtailed, removing the FBT makes common sense. It would:

Stimulate the hospitality, accommodation and tourism sector and assist in its recovery.

Protect existing jobs and create new jobs.

Increase profi ts and taxable incomes thereby increasing tax revenue.

It would benefi t other small businesses – for example tradies, builders, and hairdressers, allowing them to shout good staff members a meal or weekend away.

We will keep you posted on the eff orts to remove the FBT and be assured, we will continue to chase further relief while this pandemic continues – particularly for our hard-hit members in Victoria.