Outrage over abolition of tax breaks for lunches

Posted by James Ferre on 15th May 2008

The Federal Budget, announced on May 13, has changed legislation to ensure that workplace lunches can no longer be considered a salary sacrifice. Paying for lunch with pre-tax money has, not surprisingly, become increasingly popular over the past few years and caterers are disappointed with the government’s decision.

In order to receive the benefits employees needed to have a ‘smart card’ and upload credit to make pre-tax lunch purchases. The savings for employees were estimated by CHOICE to be approximately $756 a year. The employer also benefited because many of their workers would stay in the office to have lunch and meals purchased were exempt from Fringe Benefits Tax.

Services companies EzyBite, Smart Salary and Fleximeals have been leading the way in this field and are understandably aggrieved with the decision and lack of consultation. “The Government is mistaken that salary-sacrificing for lunch is a rort and inequitable,” EzyBite Managing Director Thomas Beurthey told The Australian.

The Government has estimated the changes to the law will save over $700 million over four years but EzyBite told The Australian that the industry was only worth $36 million a year. Either way it is a massive blow to certain members of the catering industry and their food suppliers.