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Support Foodbank’s call for a food donation tax incentive

Tax deductions for donating food can reduce food waste, help ensure food security and help Australia achieve its reduction targets.

You may be aware that, with the help of a Fight Food Waste CRC project, Foodbank Australia commissioned a report from KPMG on a proposal for a new tax incentive to reduce food waste, promote sustainability and support businesses at the same time as helping many Australians in need of food relief.

This report found that a National Food Donation Tax Incentive would:

  • help Australia achieve its food waste reduction target of 50% by 2030
  • encourage companies to actively reduce food waste and provide food relief through the donation of food and related services to Australian charities for people in need in the community
  • stimulate the economy by creating flow-on economic activity (including job creation) within the food industry.

You can help!

We are seeking your support in advocating for the adoption of this tax incentive by the Commonwealth Government.

Read the letter of support and pledge your organisations’ support by adding your logo.

We are aiming to get more than 100 food industry signatories to help us grab attention in Canberra. If your company is willing to sign up, please complete the below form and send us your logo.

If you have any questions before committing, do not hesitate to get in touch with Sarah Pennell at Foodbank Australia at sarah@foodbank.org.au.

Food Waste Tax Incentive: food relief through Australia’s tax system

Barriers impacting participation in food waste reduction

Under the current policy framework, donations of services for food transportation and logistics, pallet hire and storage, and refrigeration – all food relief services which are required in the food donation process – can only attract limited deductions in limited circumstances. This is a barrier to many companies actively participating in food waste reduction and food relief in Australia.

Given the cost of immediately disposing food can be far lower than the cost incurred in donating food, and the tax deductions allowed for donating food compared to simply discarding food is the same in many instances, it is often more practical and cost effective for businesses to discard food rather than donate it under the current policy framework. As a result, the hunger relief and food waste reduction sectors are currently experiencing difficulty in attracting donations of food and relevant services that are essential to their objectives.

Supporting the industry to alleviate food waste

To address these issues, we recommend a tax policy be developed to optimise Australia’s food donation incentives by leveraging global examples of food donation policies, as well as the current tax incentive framework established under Australian tax law. The main purpose of this proposed tax policy is to achieve food waste reduction targets and alleviate the food insecurity experienced by many Australians.

A new incentive would support primary producers, processors, manufacturers, the logistics and transport industry, as well as other service providers who are committed to the alleviation of food waste and insecurity in Australia.

Globally, food waste tax incentives have been introduced in many key global jurisdictions (including OECD countries) including United States, United Kingdom, France, Canada and Netherlands.

In the report, KPMG consider the tax incentives offered globally to put forward design options for the introduction of a specific food relief tax incentive in Australia.

The National Food Waste Tax Incentive

There are two options to consider for a specific food waste tax incentive to be implemented (the ‘National Food Waste Tax Incentive’). The first option has features broadly in line with the current R&D tax offset with appropriate limitations and safeguards.

The second option would be for an enhanced deduction option similar to that adopted by the United States, which would provide the taxpayer with a choice to deduct 200 percent of the cost or 120 percent of the market value of goods or services provided.

If enacted, the proposed National Food Waste Tax Incentive would contribute materially to stimulating activity in the economy at a time when this is greatly needed. An incentive of this kind would not only support the donation of food but would also potentially create important flow-on economic activity including job creation by stimulating relevant supporting activities and services.

KPMG estimate a National Food Waste Tax Incentive to have a direct cost to Federal Government of approximately $50 to $100 million per annum which is minimal in comparison to the large offsetting social, economic and environmental benefits of approximately $2 billion per annum1 and against the current cost of food waste to the Australian economy of over $20 billion annually.

The National Food Waste Tax Incentive would also directly assist in achieving the 50 percent target for reduction of food waste in Australia by 2030 as announced by the Federal Government in the National Food Waste Strategy2, giving rise to large net social, economic and environmental returns for all Australians both now and into the future.

Source: KPMG, Food relief Australia tax incentive.

Have questions?

If you have any questions before committing, do not hesitate to get in touch with Sarah Pennell at Foodbank Australia at sarah@foodbank.org.au.

Sarah Pennell

General Manager Foodbank Australia

Carolyn Eggart

Food Rescue Sector Action Plan Lead, Stop Food Waste Australia