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Small and medium-sized enterprises (SMEs) are facing critical investment decisions following this week’s 2025 budget, which saw the $20,000 instant asset write-off threshold removed.
SMEs now have until 30 June 2025 to purchase and install equipment under the current policy, after which the threshold will drop to just $1,000 unless a new commitment is made to extend the write-off rules.
ScotPac CEO Jon Sutton highlighted the uncertainty created by the budget decision, saying that it would cause a capital expenditure headache for thousands of SMEs planning to invest in productivity-boosting assets.
“Businesses have come to rely on the write-off rules in recent years to help upgrade or replace essential assets like vehicles and trailers, computers and printers, and power tools and equipment,” Sutton said.
According to new data from ScotPac’s SME Growth Index Report, 59 per cent of Australian SMEs are planning to invest in their businesses in the six months to August 2025.
However, the changes to the instant asset write-off will jeopardise these plans, especially as many SMEs are already grappling with the financial strain of higher wages, superannuation, and other compliance costs.
Previous research by ScotPac found that when the instant asset write-off cap was reduced to $20,000 in July 2023, the expenditure plans of 61 per cent of SMEs were immediately impacted.
A further 20 per cent said they would delay investment by six to 12 months.
Sutton has urged SME owners and operators to reassess their capital expenditure plans and priorities in light of this week’s budget.
“SMEs planning major asset purchases should carefully consider all available funding solutions so they don’t miss a critical investment opportunity,” Sutton said.
“ScotPac has been supporting Australian businesses and their brokers to plan and fund essential asset purchases for more than 35 years.
“We take pride in delivering the certainty and confidence business owners need when it comes to making capital investment decisions.”
Following the budget’s announcement, the CEO of CPA Australia, Chris Freeland, criticised the lack of ambition within the budget regarding support for SMEs.
“SMEs – many of which have thin margins – needed a Budget that would significantly alleviate the cost pressures they face every day. The unrelenting rise in insurance premiums and the burden of utility bills, materials, wages, fuel and various other inflationary pressures are hard to manage,” he said.
“Though the emphasis on relieving pressures on household finances was expected, a more business-centric budget would have benefited all Australians because small businesses are significant contributors to the economy and job creation.”
[RELATED: Industry heads react to this year’s federal budget]
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