The Senate Economics Committee has rejected the Food Donations Bill that proposed a tax offset for companies donating excess food to food relief agencies rather than dumping it. While the bill had the potential to deliver the equivalent of 100 million meals to food relief organisations, the committee said it had “serious concerns” including the bill’s “generous” tax concessions.
Food relief agencies and social welfare organisations have questioned the committee’s decision to reject the bill outright rather than make recommendations for amendments.
Foodbank Australia COO, Sarah Pennell, told Food & Drink Business they were more disappointed than surprised by the outcome.
“The report is poor, in that instead of making recommendations based on the submissions and hearings, the committee just flatly rejected it. It is frustrating, because some of the concerns with the bill that drove their decision we had addressed to them directly in the hearings,” Pennell said.
The Tax Laws Amendment (Incentivising Food Donations to Charitable Organisations) Bill 2024 was tabled in July by West Australian senator Dean Smith. The legislation would change Australia’s tax system to encourage the donation, rather than dumping, of food, incentivising small to medium food producers, such as farmers and growers, to donate excess fresh fruit and vegetable to charitable organisations like Foodbank.
Smith’s bill proposed that if a company received a payment for food donation activities, it could claim the shortfall between the payment and costs incurred.
The tax offset would be refundable for companies with an aggregated turnover of less than $20 million; above that, it would be non-refundable. The offset would cover the cost incurred by a company in its food donation activities for an income year and would be capped at either $5 million or a percentage of the food donation costs, whichever was lower.
The percentage would be based on the company’s aggregated turnover. Less than $20 million turnover would receive a refundable offset of 45 per cent of costs. Over $20 million but less than $50 million – a non-refundable offset of 40 per cent, and a turnover of $50 million – a 30 per cent non-refundable offset.
Whether the committee and submitters were particularly sensitive to any monetary action involved supermarkets due to the current level of scrutiny the retailers are under remains to be seen, but the mere chance that offsetting food donations from large supermarkets could indirectly increase their profit margins had stakeholders alarmed.
But Pennell had told the inquiry the bill had “strong guardrails with regard to what can be claimed in relation to the activities that can be claimed and the cost of activities that can be claimed, but also where the food goes. So, both sides have been looked at with regard to ensuring that there is a fence around this, and only appropriate activity is included”.
She also addressed concerns regarding the offset thresholds. “They would not be eligible in that their turnover exceeds the threshold that appears in the bill. At the moment the threshold is $50 million. Our recommendation is that it be increased to $250 million to encompass medium businesses. Even at $250 million, it's worth noting that the annual turnover of the likes of Coles and Woolworths is tens of billions – so they would not in any way be eligible for this,” she said.
Committee chair, Senator Jess Walsh said, “thank you for clarifying that.”
KPMG, which released a report into boosting food relief through the tax system in 2020 and has been a driving force in earlier modelling, stakeholder engagement, and feasibility of a food donation tax incentive scheme, told the committee that “many businesses get the same tax outcomes from disposing excess food as they do from donating it”.
It argued that the bill would “enable an estimated $2 billion per annum social, economic and environmental benefit and positively contribute to Australia's ambition to halve food waste by 2030”.
This week, Smith moved a motion that the minister representing the Treasurer provide “all written or digital correspondence, advice, briefing notes, file notes, meeting notes, meeting agendas or minutes, or other records of interaction from 2 July 2024 to 15 November 2024 between the Treasury and the Assistant Minister for Competition, Charities and Treasury or his office in relation to the Bill. It was passed, so Treasury’s workings will be laid out on Monday (25 November).
