Senator JOYCE—In the second reading speech, the Treasurer says that the measure will improve competition between food vendors and give employees more choice of food options. But, according to introduced sources, the measure will have the opposite effect. They can also prove that former FBT exemption for supported online food purchasing by employees from hundreds of food vendors was particularly used by employees in non-CBD areas where there are no or limited food choices. They can also prove that many employers also used online and card purchasing to offer employees healthy food choices that were otherwise unavailable in their vicinity and to provide their employees with the capacity to access food other than that supplied by cafes in the bottom of their building. Does the government have a detailed analysis of the market impact of the measure in terms of competition and consumer choice?

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Mr Coles—Flowing from Mr Brown’s comments, a number of assumptions were made in relation to the take-up of the measure. One of the key things here is that it provides a relatively neutral position between the arrangements available to employees versus the arrangements available to other workers and other people in the community such as sole traders, people in partnerships and so forth, who have to pay for their lunch from their after-tax dollars. It provides an equivalent basis for consideration between people and how they provide their money. The other important aspect of this is not all employers offer salary sacrifice. Not all employers are able to provide this benefit for their employees. What it does do is ensure that there is a neutral position in the treatment of these arrangements between the broader community.

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Senator JOYCE—Generally, what we have found is the people currently utilising this process to their financial advantage are using it for about $25 a week—is that it?

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Mr Coles—We are relying on industry figures; we do not have access to those numbers.

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Senator JOYCE—It is something I am fascinated with because I wish I had used it. How do we ascertain what the actual amounts are? If they are just industry figures, is it an anecdotal estimation by Treasury?

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Mr Brown—The starting point for the estimate was the number of taxpayers who are engaging in salary sacrifice arrangements. We have information on that. There is no data on the types of salary sacrifice arrangements that they actually enter into, apart from very broad groups—for instance, cars and particular types of salary sacrifice arrangements. Cars are concessional, so you can identify cars, but other types of fringe benefits are less identifiable.

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Senator JOYCE—It is certainly not nominated on your income tax return. I imagine it may be nominated on a fringe benefit tax return. Are the figures nominated in a quantifiable form in some kind of fringe benefits tax return? Is that where we are getting it from?

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Mr Brown—Fringe benefits tax returns are lodged by employers, so you get the number of employees with fringe benefit arrangements from that but you do not—

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Senator JOYCE—You do not get the particulars of where they are spending it.

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Mr Brown—That is right.

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Senator JOYCE—What is the work that goes into working out how much of these fringe benefits revolve around these meal tickets?

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Mr Brown—The approach that was employed was to apply a take-up rate to the estimate of fringe benefits tax. To get to that, yes, it is applying anecdotal evidence and what you would, I suppose, call reasonable assumptions, drawing on whatever evidence is available—but there is not a lot.

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Senator JOYCE—That is one of my queries. In saying that we are going to have a $750 million saving over four years, we are on our way to a billion dollars. That is a pretty substantial saving from something that we cannot really be sure of.

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Mr Brown—One of the factors here is that we are starting from a very large base.

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Senator JOYCE—Maybe I was an accountant in the wrong town, but I have never met anybody with a meal ticket.

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Mr Brown—Meal card?

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Senator JOYCE—Yes. Has anyone here got them?

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Senator WEBBER—Annette and I were just having that conversation. I am fascinated by those industry sources, because I know a lot about FBT and salary sacrificing, but I had never heard of meal cards until this inquiry.

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Senator JOYCE—Have any of you got one?

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Mr O’Connor—No. Perhaps this may assist the inquiry. There are some things we have gleaned from the internet. For example, this is one advertisement ‘Make your lunch a tax break’. In relation to your question about average amounts per week, in this particular example they are doing an analysis on either $50 or $80 a week, and they have a chart there as to what tax savings are available.

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CHAIR—Can you table that?

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Mr O’Connor—Certainly.

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Senator JOYCE—I know we are not going to get this, but I would be interested to meet an organisation that actually uses the meal cards. They are probably not going to be in business for much longer; they are probably going out of business. I have never seen them. Mr Flavel, you are here about the change in depreciation arrangements in regard to software.

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Mr Flavel—Yes.

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Senator JOYCE—As I see the current arrangements—and I am just doing this from memory so please shoot me down where I get it wrong—software depreciation is now going to be over four years.

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Mr Flavel—That is right, yes.

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Senator JOYCE—The software in my business lasted a year, if that. At that time we turned it over or changed it around. The computers were going out of the door every 2½ years to three years maximum. How do you come to a useful life of software of four years? Even now, they are designing software that actually has knockout conditions on the clock. MYOB, HandySoft and all that sort of stuff have a license agreement, so they literally just switch off.

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Mr Flavel—There are a couple of points that might be relevant. The first is that you mentioned computers, I guess more generally, and you might think they are hardware. The Commissioner of Taxation determines the effective life of a number of assets and has determined that the effective life of hardware is four years. That is what this measure does; it actually aligns software and hardware. In relation to some of the examples like MYOB or licence agreements, if the expenditure would ordinarily be revenue in nature, that is essentially a one-year benefit, this measure does not change that. This applies to capital items.

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Senator JOYCE—For example, if I buy a program called ‘How to make money out of meal tickets’, then I have to depreciate that over four years. But really the circumstances of what is going on, if this is reflecting a dynamic in society—where did the word ‘four’ come from? Why four years?

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Mr Flavel—Four just simply aligns the arrangements for software with hardware, given that for software, by its very nature, there will