Key Takeaways:
- The $20,000 instant asset write-off will end in June 2025, with a significant reduction to $1,000 unless new legislation is passed.
- The government will ban non-compete clauses for employees in certain sectors starting in 2027. This will give workers more career flexibility and help SMEs access a broader talent pool, but it also introduces challenges for talent retention.
- A $20 million initiative encourages consumers to favor Australian-made products and services.
- Small businesses will receive two $75 rebates on energy bills, and the hospitality sector benefits from a pause on draught beer excise indexation for two years starting in 2025.
On March 25th, treasurer Jim Chalmers delivered his fourth federal budget. This year's budget has definitely focused on individuals vs businesses. It includes income tax cuts, student debt relief, and new support under the Help to Buy scheme - with nothing new for SMEs.
This doesn't mean that small business owners were completely ignored. Read on for our top 6 takeaways from the 2025 - 2026 federal budget that small businesses need to know about:
Instant asset write-off threshold drop
In what is perhaps the biggest update for business owners, the federal government has decided not to extend the $20,000 instant asset write-off (IAWO) beyond June 2025.
Up until now, this popular tax benefit allowed business owners to claim immediate deductions on the full cost of eligible depreciating assets in the year they first use or install them, with a write-off maximum of $20,000 per asset.
However, if new legislation isn't passed, the threshold will drop to just $1,000 from July 1, 2025.
This "is a disappointing outcome for small and medium businesses at a time when support is needed most. The IAWO has been a valuable lever for encouraging business investment with immediate tax deductions, simplified reporting, and a much-needed cash flow boost for businesses looking to grow," says Alex Molloy, Valiant's co-founder.
"Even at $20,000, the current amount eligible for the IAWO is probably too low given the rising cost of equipment and technology. The bigger issue, though, is the lack of certainty. It’s March and businesses need clear, long-term policy settings, not last-minute surprises that make it harder to plan with confidence," he adds.
If you're looking to take advantage of the current rules before June 30 and are considering asset finance to purchase the equipment you need, we can help. Reach out to us today and chat to a lending expert, completely free of charge.
Non-compete clause ban
With a policy set to take effect in 2027, the federal government will ban non-compete clauses for employees in industries like hairdressing, childcare, and construction earning less than the high-income threshold, currently at $175,000 per year.
More than 3 million Australians face restrictions from non-compete clauses, which stop them from switching to a competitor or starting a similar business [2].
By scrapping these restrictive rules, the government will be giving workers the chance not only to pursue better-paid opportunities but also to turn to entrepreneurship with increased flexibility.
This initiative also gives existing SMEs access to a broader pool of talent, which can work two ways. On one hand, you can hire skilled professionals without having to worry about legal implications. However, so can your competitors, which makes talent retention crucial for keeping your team from being poached.
$20 million ‘Buy Australian’ plan
The federal government is investing $20 million in the 'Buy Australian' plan, which encourages consumers to favour Australian-made products and services. Although details are yet to be confirmed, this appears to be an initiative to soften the blow of new US tariffs.
This could potentially result in increased demand for local businesses' products and services and, ultimately, higher revenue.
Fee-free TAFE skills agreement
The fee-free TAFE skills agreement isn't new, but the federal government has decided to make it permanent. The plan is to offer 100,000 places every year from 2027, with $1.6 billion allocated to fund these places until 2035 [3].
This agreement provides "tuition-free training places for people wanting to train, retrain or upskill" [4]. For business owners, this means access to a more skilled (and more diverse) workforce, as well as reduced recruitment and training costs, as new employees will already be trained in specific skills.
Energy bill relief
To help with rising energy costs, about 1 million small businesses will get two $75 rebates on their quarterly power bills. For eligible businesses, these rebates will take effect in the second half of 2025, after last year's credits expire (which happens on June 30th).
This initiative is small, but can provide some help small and medium-sized enterprises (SMEs) through lower energy prices.
The energy bill relief program is important for people in industries like hospitality, retail, and manufacturing. Rising energy costs especially affect these industries.
Beer tax relief for hospo
In a win for pubs, breweries, and hospitality operators, the Government will pause indexation on draught beer excise for two years starting August 2025. This move aims to reduce costs for venues. It also encourages ongoing investment in an industry that has faced challenges.
Starting on 1 July 2026, the limit for the alcohol excise remission scheme will rise to $400,000. This change will give alcohol manufacturers and wine producers more space to grow and reinvest.
It’s a welcome boost for a sector still recovering from years of disruption.
References
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