2025–26 Federal Budget: What SMEs Need to Know About Tax, Cash Flow & Forecasting
Introduction The 2025–26 Federal Budget delivers a mix of cost-of-living relief, tax reform, and targeted business incentives. But what does it actually mean for small and medium-sized businesses (SMEs), especially those in Sydney and across Australia with under $20 million in revenue?
At Lowe CFO Advisory, we specialise in helping growth-focused businesses understand the numbers behind their operations. Here, we break down the Budget's implications through a cash flow and management accounting lens.
Key Takeaways for Business Owners
1. Instant Asset Write-Off Changes The $20,000 instant asset write-off continues for eligible small businesses until 30 June 2025. After that, the threshold reverts to $1,000.
What this means for you: Now is the time to review your capital expenditure plans. If you're considering purchasing key equipment, doing it before EOFY 2025 may provide tax timing advantages. We'll work with you to model the impact on your short-term cash flow.
2. Increased ATO Compliance Activity The ATO is receiving further funding to increase audit and compliance programs, including a focus on GST, PAYG, and contractor reporting.
Recommendation: Ensure your bookkeeping, payroll and BAS submissions are audit-ready. Our monthly CFO packs include reconciliations and flags for ATO risk indicators – helping you stay ahead.
3. Energy Bill Relief Eligible small businesses will receive a $150 rebate on electricity bills. It’s a small win, but it won't significantly change your operating margin.
Pro tip: Don't rely on rebates. Instead, let’s build a rolling 12-month forecast that factors in utility cost inflation.
4. Support for Priority Sectors The "Future Made in Australia" plan offers major funding to renewable energy and critical minerals, with flow-on effects in engineering, construction, and advanced manufacturing.
If you're in these sectors: Reach out – we're already assisting clients applying for grants and modelling project viability under different funding scenarios.
Personal Tax and Household Impacts
The 19% personal income tax rate drops to 16% from 1 July 2026, offering modest relief to employees.
A 20% reduction in student debt applies from June 2025.
Medicare bulk billing expansion and PBS script cost caps are welcome but have minimal direct business impact.
Tip for founders: If you're drawing a wage from your company, it may be worth reviewing PAYG withholding settings in advance of the new personal tax thresholds.
Cash Flow Planning in a Post-Budget Environment The Budget reflects a government balancing relief with longer-term fiscal concerns. For SME owners, the key is adaptability:
Model different scenarios: Our clients get access to rolling forecasts that reflect tax changes, grant income, and seasonality.
Reassess your pricing and wage strategies in light of cost pressures and tax changes.
Prepare for scrutiny: Higher audit activity means every transaction should be traceable, reconciled, and documented.
Lowe CFO Insight "Budgets come and go, but financial discipline is year-round. The businesses that win are those that measure early, adjust quickly, and never rely on rebates or one-offs to stay solvent."
Need help navigating the changes? Lowe CFO Advisory partners with ambitious Australian businesses to deliver:
Cash flow forecasting and scenario planning
Budget-to-actual reporting
Grant and incentive modelling
Virtual CFO support
Book a free 30-minute review to get your business budget-ready: www.lowecfoadvisory.com/contact
Tags: cash flow forecasting, 2025 budget Australia, SME tax advice, virtual CFO, management reporting, Sydney advisory, instant asset write-off