Coalition Election Announcements
The unofficial federal election campaign is now underway, with Opposition Leader Peter Dutton announcing new tax policies while campaigning in Queensland on 19 January.
We are sharing these updates to keep you informed about potential tax changes after the election based on the major parties’ announcements. People vote for many different reasons, and small business tax policies may not be a key deciding factor. We are not suggesting how you should vote—that choice is entirely yours.
Entertainment Expenses – Support for the Hospitality Industry
The Coalition has proposed allowing small businesses to fully deduct up to $20,000 per year on food and entertainment expenses at clubs, pubs, and restaurants. However, alcohol costs will not be included. This policy will initially apply for two years, though there is a possibility it could be extended.
This proposal applies to businesses with an annual turnover of up to $10 million. The financial impact of this measure has not yet been released, but details may be provided later in the campaign.
It is important to note that this is not a complete removal of restrictions on entertainment expenses. Costs associated with sporting events, theatre performances, and similar entertainment will remain non-deductible. If employees are involved, these expenses may also be subject to Fringe Benefits Tax (FBT). This policy specifically applies to meals and related entertainment expenses.
The exclusion of alcohol aligns with current workplace practices, as many businesses now enforce strict drug and alcohol policies. While some may remember long business lunches of the past, workplace cultures have evolved significantly.
It remains to be seen whether this policy will encourage businesses to spend more on hospitality. When entertainment expense deductions were first restricted in 1985, some feared the hospitality industry would suffer, but businesses adapted quickly. Similarly, easing these restrictions now may not lead to major changes in business behavior.
Nonetheless, any tax relief is helpful, and this temporary measure is likely to be welcomed by small businesses.
Instant Asset Write-Off (IAWO) Threshold
Another key Coalition proposal is increasing the Instant Asset Write-Off (IAWO) threshold. This refers to the maximum amount that small businesses (with an annual turnover of up to $10 million) can immediately deduct when purchasing depreciating assets.
The Coalition plans to raise the threshold to $30,000 and make it a permanent rule. Currently, the $20,000 threshold must be approved by Parliament annually; otherwise, it automatically reverts to $1,000. For instance, the law setting the $20,000 limit for 2023-24 was only passed days before 30 June 2024, which may have reduced its effectiveness as an incentive.
The announcement does not specify when the $30,000 threshold would take effect. If the Coalition wins the election and acts quickly, it could apply from the 2024-25 financial year, but it is more likely to start in 2025-26.
A higher $30,000 threshold would provide greater benefits than the current $20,000 limit, giving businesses more flexibility in purchasing
equipment and assets. Ideally, this announcement will lead to further commitments to small business tax incentives before the election.
