In a letter to Treasurer Josh Frydenberg, Australian Small Business and Family Enterprise Ombudsman Kate Carnell argued that the change would give a boost to small businesses impacted by the tax.
“As it stands, small businesses are required to pay FBT on items that large businesses often provide in-house to retain staff such as meals, gyms and childcare centres,” Ms Carnell said.
“Larger businesses can actually claim some services as business expenses, without paying FBT. But small businesses that provide the same benefits to their teams offsite have to pay FBT.”
Ms Carnell also argued that high rates of FBT act as a disincentive to businesses spending with small businesses, particularly those in the hospitality and tourism sectors which are hurting the most right now.
She said that a weekend away, lunch at a restaurant or a team bonding game of golf all attract FBT.
“FBT is discouraging businesses from spending with small businesses, which reduces the amount of money flowing into the economy,” Ms Carnell said.
“Fringe benefits tax accounted for less than 1 per cent of government revenue in 2019–2020 and that figure is likely to be even less in the current financial year due to the economic downturn.
“Abolishing FBT would cost no more than $4 billion a year to the government, but it would be an effective support measure for small businesses and also stimulate cash flow into the economy at a time when we need it most.
“EY modelling done on behalf of Tourism Accommodation Australia (TAA) and the Australian Hotels Association (AHA) indicates suspending FBT on accommodation, meals and beverages alone would produce economic returns of up to 3.8 times the direct cost to the government.”