Why the Federal Budget could make or break small business

As the federal government gears up to release the 2025–26 Budget, the Council of Small Business Organisations Australia (COSBOA) is calling for serious reforms for small businesses. Failure to do so could result in Australia’s economic engine to stall.

COSBOA CEO Luke Achterstraat says small businesses are struggling under rising costs and regulatory pressures, and the government must step up.

“A small business-led recovery is the only way to strengthen the economy, create jobs, and ensure Australia remains globally competitive,” he said. “But right now, small businesses are running on empty. If the Federal Budget fails to deliver real support, we risk seeing more closures, higher prices, and a weaker economy for everyone.”

Tax reform: a fairer system that rewards, not punishes

COSBOA is pushing for major tax reforms to help small businesses grow, including:

A permanent and expanded Instant Asset Write-Off, lifting the threshold to $150,000 to encourage investment in equipment and technology.
A review of payroll tax to simplify and harmonise thresholds across states and territories, making it easier to hire staff.
Reintroducing the Small Business Technology Investment Boost, which would provide a 20% additional tax deduction to support digital adoption and cybersecurity.
Tax relief for new small businesses to help startups survive their critical early years.

“The tax system should encourage small businesses to invest, innovate, and hire—yet too often, it does the opposite. A simplified and fairer approach is needed to unlock growth,” Achterstraat said.

Cutting red tape: let small businesses focus on business

COSBOA says small businesses are drowning in bureaucracy, forcing them to spend valuable time on compliance instead of growing their business. They are calling for:

Mandatory small business impact statements before any new policy or regulation is introduced.
A ‘Small Business Flying Squad’ to cut through outdated and contradictory regulations.
More user-friendly government systems, making interactions with the ATO, Fair Work Commission, and ASIC easier.
An industrial relations framework that supports flexibility for casuals, contractors, and sole traders.

“The cost of compliance is a hidden tax on small businesses. Every hour spent navigating complex regulations is an hour not spent growing the business, creating jobs, or serving customers. Cutting red tape is an economic necessity,” Achterstraat said.

Failure to act risks economic decline

Without targeted support, COSBOA warns small businesses will continue to be squeezed by rising costs and excessive regulation, leading to higher inflation, less competition, and a weaker economy.

“Australia cannot afford to take small businesses for granted,” Achterstraat said. “If the government wants a resilient and competitive economy, it must fuel the small business engine—not let it sputter and stall.”

A budget that powers small business, not stalls it

Alongside tax reform and red tape reduction, COSBOA is pushing for:

Workforce solutions to help small businesses attract and retain staff.
Energy relief to ease the pressure of rising energy costs.
Cybersecurity support to protect small businesses from cyber threats.
Fairer payment terms to ensure small businesses get paid on time.

“This budget is a chance to set small businesses up for success, ensuring they have the support, certainty, and conditions needed to power Australia’s economic future. The opportunity cost of inaction is too great,” Achterstraat concluded.

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