Official modelling shows Peter Dutton’s proposed tax deduction for small business lunches will cost less than $250 million per year, as the Coalition moves to counter accusations its new policy is wasteful.

Mr Dutton said last Sunday that enterprises with a turnover of up to $10 million would be able to deduct up to $20,000 of “business-related meal and entertainment expenses” provided to clients, vendors and employees without incurring fringe benefits tax. The measure, which will last for an initial two years, excludes alcohol.