How the 2025 Federal Budget Impacts Australian SMEs

1. No Extension to Instant Asset Write-Off

The popular $20,000 instant asset write off scheme which allowed businesses with an aggregated turnover of less than $10 million to immediately deduct eligible assets, has not been extended beyond 30 June 2024. This leaves uncertainty for SMEs planning capital investments in the 2025-2026 financial year. 

Instead, the government has signalled a return to the existing depreciation rules under the simplified depreciation system. Businesses must now assess how to spread deductions over time. 

Need help planning your investments? Speak to our business advisory team. 

2. Energy Bill Relief for Small Business

The budget delivers an estimated $3.5 billion in total energy bill relief, with approximately 1 million small businesses set to benefit. Eligible small businesses will automatically receive $325 in energy bill rebates over 2025-2026. The funding will be distributed via state and territory governments. 

This relief is expected to offset cost of living pressures and help SMEs maintain margins amidst inflation. 

Track and report your upgrades with confidence using our financial reporting services.

3. Compliance and ATO Focus Areas

The government has allocated $588 million over four years to extend the ATO Shadow Economy Compliance Program, targeting under-reported income and undeclared cash transactions. Additionally, the ATO’s Tax Avoidance Taskforce will receive a $187 million extension to continue investigating SMEs and wealthy individuals.

Focus areas include:

• Superannuation guarantee compliance
• GST reporting accuracy
• PAYG withholding
• Contractor misclassification 

Ensure your records are audit-ready with expert bookkeeping support.

4. No New Digital Adoption Incentives

While the previous Small Business Technology Investment Boost has expired, no new initiatives were introduced in the 2025–26 Budget to help SMEs accelerate digital transformation or cybersecurity resilience.

This is despite growing demand for digital systems, with many SMEs continuing to transition to cloud-based platforms, accounting software, and automated payroll tools.

Let our risk advisory experts help you manage cybersecurity risks and compliance requirements.

Strategic Recommendations for SMEs

Plan Capital Investments Strategically

Although the instant asset write off has not been extended, SMEs can still benefit from careful planning around capital expenditures. Evaluate purchases that enhance productivity and align with long term business goals.

Review and Update Payroll Systems

With growing scrutiny from the ATO, now is a great time to review payroll processes. Ensure your payroll software is Single Touch Payroll (STP) compliant and accurately reports super, tax, and entitlements.

Ensure compliance with ease using our payroll services.

Reassess Your Risk Profile

With increased ATO scrutiny and evolving financial regulations, risk management should be a top priority. Conducting a full risk assessment ensures you’re prepared for any regulatory changes.

Our risk advisory team can assist in identifying and managing key risks.

Build a Resilient Financial Strategy

Budget changes provide the perfect moment to reassess financial goals and cash flow strategies.

Let our business advisory experts guide you through a tailored approach to growth.

What These Budget Changes Mean for SMEs Looking to Navigate the Year Ahead

The 2025 Federal Budget reflects the government’s cautious fiscal approach while placing the onus on SMEs to stay compliant and financially resilient. With fewer incentives and tighter oversight, business owners must be proactive in planning, reporting, and risk management.

Looking for tailored advice? Contact Profit Services today to explore how we can support your business through this evolving financial landscape.