A case for tax reform to increase food donation by business

The challenge

Food relief in Australia is delivered via partnership between the charity and food sectors. Food is donated by industry to food relief organisations, such as Foodbank, which distribute it to front line charities for dissemination to the public.

Tax legislation and associated interpretative guidance can be employed to promote the direction of surplus, safe, near date food to food relief and divert it away from landfill, as tax exemptions and deductions have the capacity to incentivise and facilitate meaningful and appropriate giving.

However, the current tax framework in Australia is ineffective in ensuring producers of food, food businesses and retailers are adequately motivated to donate surplus to food relief.  In fact, the current tax treatment for donating food is no better than for dumping it; and there is no benefit for donating services and infrastructure essential to the food donation and redistribution process, such as transportation, shipping pallets and packaging or cold storage facilities.

Our plan

A study by Macquarie University Law School has highlighted that experience in overseas jurisdictions has shown that the most effective way to motivate the food industry to donate food to food relief charities is via reforms to the tax system, either in the form of tax deductibles or incentives. The same study has shown that tax reforms in other countries have allowed for more favourable tax incentives – and not just for food donations but for logistics, cold chain infrastructure, packaging systems, and warehousing and logistics.

This project with food rescue charity Foodbank will build on this analysis of the potential to improve and extend tax incentives for the donation of food and services and will develop a case for tax reform in Australia to encourage and support increased donation of surplus food by the food industry to food relief charities to assist people in need, thus reducing both food insecurity and food waste.

One example of where this has been employed effectively is the United States of America, where policy advocate, ReFED, found that every $1.97 in tax deduction yields 1 kilogram of food or 2 meals for food relief (retail value $6). On this basis, $15.4 million in tax incentives would generate an additional 7.8 million kilograms of food for food relief. This equates to 15.5 million meals.