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ScotPac’s CEO has warned that not extending the $20,000 instant asset write-off threshold could complicate growth plans for many SMEs.
Jon Sutton, CEO of non-bank lender ScotPac, has said many small and medium-sized enterprise (SME) owners face a “capital expenditure headache” after the federal budget made no mention of extending the $20,000 instant asset write-off threshold.
The Albanese government unveiled its federal budget for 2025–26 on Tuesday evening (25 March) with a range of pledges for SMEs, including grants of up to $25,000 for energy upgrades.
However, the budget didn’t mention an extension to the instant asset write-off scheme, which allows eligible businesses with a turnover of up to $10 million to deduct the costs of assets worth $20,000 or less.
Labor had extended the scheme until 30 June 2025 in its last budget.
But if the scheme isn’t extended further, the threshold for deductions will revert to $1,000 in the new fiscal year (1 July 2025).
ScotPac’s CEO said that failing to extend the scheme in its current form could create uncertainty for SMEs that could have used it to invest.
“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.
“New data from ScotPac’s SME Growth Index Report found that 59 per cent of Australia’s SMEs are planning to invest in their businesses in the six months to August 2025.
“However, the instant asset write-off change in the Budget will throw those plans into jeopardy, particularly when SMEs are already feeling the cash flow pinch of higher wages, superannuation and other compliance costs.”
‘Missed opportunity’
The absence of an extension to the scheme was a common theme of industry reactions to the budget, with Mortgage & Finance Association of Australia (MFAA) CEO Anja Pannek noting the relatively light list of measures for SMEs in the body’s response.
“The feedback we have had from our commercial and asset finance broker members is that the instant asset write-off is important and something they value,” Pannek said.
“A permanent scheme will provide certainty to our members and their small business clients.”
Luke Achterstraat, CEO of the Council of Small Business Organisations Australia (COSBOA), also said the Labor government’s budget could have put more in place to help small businesses.
“With decade-high insolvencies and crippling energy, rent and input costs, this budget had the opportunity to provide a long-term roadmap for small business growth,” Achterstraat said.
“Unfortunately, the budget largely recycles existing policies and fails to substantially deliver for the 2.5 million small businesses in Australia and the 5 million people they employ.”
Meanwhile, the federal opposition has indicated that the instant asset write-off threshold would be part of its plans moving forward.
In his response to the 2024–2025 federal budget, Opposition Leader Peter Dutton had committed to making the write-off permanent while increasing the asset threshold level to $30,000.
A joint statement from Deputy Opposition Leader Sussan Ley and shadow treasurer Angus Taylor said this would remain a feature of the opposition’s response to the latest budget.
“Making the instant asset write off permanent means 98 per cent of businesses will no longer have to deal with depreciation schedules for investments under $30,000,” Taylor said.
“This will free up cash for businesses to invest, take risks and create jobs and opportunities for all Australians.
“We need more small businesses, and we need more small businesses growing into bigger employers.”
Critical investment choices
In the wake of the budget announcement, Sutton said SME owners and operators should sit down with their key advisers and reassess their capital expenditure plans and priorities.
“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.”
[Related: 26% of SMEs to seek external funds in 2025]
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