What Does the Federal Budget 2024-25 Mean for Small Businesses?
The Federal Government has rolled out its third budget, and small businesses are eager to understand its impact.
With mixed news on the horizon, small business owners need to be aware of both the wins and the challenges this budget presents.
Wins for Small Businesses
One of the standout positives for small businesses in the 2024-25 Federal Budget is the continuation of the $20,000 instant asset write-off scheme.
Small businesses with annual revenue of $10 million or less can continue to write off eligible asset purchases of up to $20,000 until 30 June 2025.
This tax incentive allows businesses to immediately deduct the cost of qualifying assets rather than depreciating them over several years, offering much-needed financial relief and encouraging investment in assets that support growth.
Additionally, this year’s budget brings some relief for businesses struggling with rising energy costs.
Approximately one million small businesses are expected to benefit from a $325 energy rebate, acknowledging the challenges posed by escalating expenses. This measure is part of the $3.5 billion energy bill, which aims to ease financial pressure on both businesses and households.
Moderate Economic Growth Forecasts
While small businesses may appreciate the support measures, the economic outlook remains cautious.
The GDP growth forecast for this financial year stands at 1.75%, expected to rise to 2% by 2026. Though this signals modest growth, it also suggests that the labour market will soften, with unemployment predicted to increase to 4.5% next year.
On a more positive note, inflation forecasts are improving, with expectations that it will return to target sooner than anticipated.
For the first time in nearly three years, real wages are also on the rise, a key indicator that consumer purchasing power is gradually improving.
This could bode well for small businesses, potentially driving up demand and sales as consumers feel more confident in their financial standing.
Tax Cuts & Infrastructure Investments
Small business owners could benefit indirectly from a range of tax cuts set to take effect from 1 June 2024, which will provide significant relief to taxpayers.
By injecting more money into consumers’ pockets, these cuts are expected to increase spending, a welcome boost for businesses in the retail and service sectors.
Another important aspect of the budget is the effort to address the housing shortage, with a commitment to build 1.2 million homes over the next five years.
This initiative opens up opportunities for businesses in the construction and related industries, with potential knock-on effects for other small businesses as infrastructure and population growth increase demand.
Home-Grown Policies and Emerging Opportunities
A major highlight is the $22.7 billion Future Made in Australia package, designed to attract investment in key areas like renewable energy, defence capabilities, and, crucially, support for small businesses.
This initiative signals a strong commitment to positioning Australia as a global economic leader, providing opportunities for entrepreneurs to tap into emerging markets.
Conclusion
Overall, the 2024-25 Federal Budget offers a range of opportunities and challenges for small businesses.
With ongoing support through the instant asset write-off scheme, energy rebates, tax cuts, and investments in infrastructure, there are clear wins for small business owners.
At the same time, modest growth forecasts and potential labour market pressures mean that businesses should continue to operate cautiously as economic conditions stabilise post-COVID and efforts to drive the clean energy transition intensify.
Important Notice: This article contains general information and is not intended as financial advice. You should consult a financial advisor before making decisions based on the content provided. Steadfast Group Ltd ACN 073 659 677.
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