Federal Budget 2025-26: what it means for your small business

2025 Federal Budget

On March 25, Treasurer Jim Chalmers delivered the 2025 Australian Federal Budget, with an election looming later in the year.

With the Albanese Labor Government seeking to balance economic growth and financial responsibility, the budget highlighted measures to ease cost-of-living pressures, strengthen Medicare, and pave the way for long-term economic stability. But for small businesses, the most notable developments are mixed—offering both support and new challenges.

 The Budget’s Key Focus Areas:

1. Cost of Living Relief

   The Government's priority remains helping Australians cope with rising living expenses. Key measures include tax cuts for all taxpayers, cheaper medicines, and expanded energy bill rebates for households and small businesses. While these moves are aimed at easing short-term financial pressures, their long-term impact will depend on broader economic conditions.

   
   

2. Investment in Infrastructure

   With a significant investment in infrastructure—spanning housing, roads, and rail—the Government is looking to bolster economic resilience and create jobs. This infrastructure push could lead to opportunities for small businesses involved in construction, logistics, and related sectors.

   
   

3. Fiscal Responsibility

   The Treasurer highlighted a decrease in the deficit and a path toward reducing national debt. This promises to give businesses and investors confidence in Australia's financial stability, though it's unclear how the government will balance its spending commitments with fiscal restraint.

Measures That Could Affect Small Business:

1. Energy Bill Relief

   Small businesses grappling with high energy prices are set to receive a much-needed boost, with $150 in energy bill relief until the end of 2025. While this is a welcome measure, it doesn’t fully offset the ongoing cost pressures that many small businesses face, particularly in energy-intensive sectors.

   
   

2. Energy Efficiency Grants for SMEs

   To help small businesses reduce long-term costs, the Government is offering $56.7 million in grants for energy efficiency improvements. These grants of up to $25,000 could allow small businesses to make necessary upgrades, from replacing outdated equipment to improving insulation or heating systems.

   
   

3. Instant Asset Write-Off Scheme Slashed

   In a surprise move, the Government has decided not to extend the popular instant asset write-off scheme beyond June 30, 2025. The current $20,000 asset threshold, which has helped many small businesses claim deductions for purchases of equipment and assets, will be significantly reduced. With this policy's future now uncertain, small businesses may feel the pressure to make significant investments before the end of the financial year, or risk missing out on these valuable tax benefits.

   
   

4. Strengthening Fair Trading and Competition

   The Government is introducing measures to curb unfair trading practices, particularly in sectors like retail where small businesses often face challenges from larger corporations. By giving the Australian Competition and Consumer Commission (ACCC) more power and enforcing stricter penalties for violations, the Government aims to level the playing field for small businesses. For those dealing with unfair practices from bigger players, this could provide much-needed relief.

   
   

5. Support for Australian-Made Green Metals and Clean Tech

   The “Future Made in Australia” initiative has received increased support for the production of green metals and clean technologies. For businesses in industries connected to green energy or sustainable products, there could be new opportunities in emerging sectors. However, these benefits may be more relevant to businesses in specific niches and less directly impactful for the broader small business community.

   
   

6. Small Business Support Initiatives

   There are also continued efforts to simplify the environment for small businesses:

   • Protection from Unfair Practices: The Government has made strides in ensuring small businesses are shielded from harmful trading practices.

   • Buy Australian Campaign: More funding will be directed toward promoting Australian-made products, encouraging both businesses and consumers to support local industries.

   • Tax Relief for Specific Sectors: Hospitality venues, brewers, distillers, and wine producers receive specific tax relief aimed at alleviating some of the sector's financial burdens.

     
     

7. National Broadband Network (NBN) Funding

   With $3 billion earmarked to complete the NBN rollout, small businesses in regional and remote areas stand to benefit from better connectivity. Improved access to high-speed internet could be a game-changer for businesses relying on digital tools for operations, marketing, and customer engagement.

   
   

8. National Licensing for Trades

   The introduction of a national licensing scheme for electricians could reduce red tape and simplify the process for skilled tradespeople to operate across state borders. Small businesses in the trades and construction industries are likely to benefit from this streamlined process.

   
   

9. Non-Compete Clauses

   The planned abolition of non-compete clauses in employment contracts could improve worker mobility, making it easier for individuals to start businesses in new sectors. While this could create more competition in certain industries, it also opens up opportunities for small businesses to hire talent from a broader pool of candidates.

   
   

10. Infrastructure Investment

    The Government’s infrastructure budget promises opportunities for small businesses in sectors like construction and logistics. With increased spending on housing, rail, and roads, contractors and service providers could see a surge in demand, especially in regional areas.

Final Thoughts:

The 2025 Federal Budget offers a mix of immediate relief and long-term investments, but it also introduces challenges for small businesses. While the energy relief and grants for energy efficiency improvements are welcome, the sudden cut to the instant asset write-off scheme will be a blow to businesses looking to invest in equipment and expand operations. The removal of this scheme’s $20,000 threshold, along with the uncertainty around its future, may create added pressure for small businesses trying to plan for the next financial year.

With the Government continuing to focus on economic responsibility and fiscal prudence, small businesses will need to stay agile to navigate these changes. Understanding how these measures apply to your specific business and planning accordingly will be key in leveraging any benefits while mitigating the impact of new constraints.