Australia: Food donation tax offset legislation introduced to Parliament

New legislation—in the form of a private member bill—introduced July 2, 2024, proposes a food donation tax offset for companies incurring expenses related to food donation activities for registered food charities.

The Senate Economics Legislation Committee is set to report on the bill by November 15, 2024, with submissions due by August 20, 2024. 

Overview of the proposed tax offset

To qualify for the food donations tax offset, companies must incur food donation expenditure within the income year for activities benefiting a registered food charity. Additionally, a receipt from the registered food charity containing prescribed information is required. Food donation activities are defined to include the donation or sale of food fit for human consumption and the provision of services related to the donation or sale of food.

The definition of food donation expenditure includes costs related to the production, manufacture, harvesting, purchase, storage, and transportation of donated or sold food. However, it excludes general business overheads, depreciation, and incidental costs such as marketing. Integrity rules exclude expenditure when the company or its associate receives or could reasonably expect to receive consideration equal to or greater than the expenditure.

The tax offset is refundable for companies with aggregated turnover less than $20 million.* For larger companies, the offset is non-refundable but can be carried forward to later income years. The offset is capped at the lower of (1) $5 million, or (2) a specified percentage of the expenditure:

• 45% for companies with turnover less than $20 million
• 40% for companies with turnover between $20 million and $50 million
• 30% for all other companies

This tax offset is a temporary measure applicable for three years from commencement (day after Royal Assent), with an independent review to consider extension.

Example

For instance, a company with less than $20 million turnover, $120,000 taxable income, and $100,000 qualifying food donation expenditure would receive a $45,000 refundable tax offset (0.45 x $100,000). This would reduce the tax payable from $55,000 to $10,000.
 

For more information, contact a KPMG tax professional in Australia:

Alia Lum | alum@kpmg.com.au

Georgie Aley | galey@kpmg.com.au

Amanda Maguire | amaguire@kpmg.com.au

Jacqui Payne | jpayne2@kpmg.com.au
 

*$ = Australian dollar