Published: April 2025
The Australian federal election on May 3, 2025, will shape the operating environment for small and medium enterprises (SMEs). Policies from Prime Minister Anthony Albanese’s Labor government and Opposition Leader Peter Dutton’s Coalition will influence tax, international trade, cash flow, and regulation—critical areas for SME success. Drawing on policy announcements, ATO rules, and industry insights, this article examines how these policies affect SMEs across diverse industries, highlighting benefits and challenges with specific examples to guide business owners.
Labor and Coalition tax policies shape SME tax obligations and financial strategies, with distinct outcomes for small businesses.
SME Impact Example:
- A Brisbane architecture firm with $1,000,000 turnover could potentially deduct $30,000 for new design software implementation under Dutton’s policy, with SMEs saving up to $7,500 in tax (25% rate), supporting project capacity.
- Under Labor’s $1,000 cap, deductions are limited to $1,000, saving only $250, potentially constraining some software investments critical for design work.
Trade policies influence SME export opportunities and supply chain costs, vital for retail and manufacturing.
SME Impact Example:
- A Melbourne retail SME exporting products to Asia benefits from Labor’s stable trade, securing $200,000 in ASEAN contracts.
- Dutton’s migration cuts could reduce local staff, increasing labour costs by $25,000 annually.
Government initiatives, while not direct cash flow policies, affect SME liquidity through spending and cost relief.
SME Impact Example:
- A Perth construction SME secures $150,000 in contracts from Labor’s housing plan, enhancing cash flow.
- Dutton’s fuel excise cut saves $4,000 yearly, but spending cuts could cost $35,000 in public works revenue.
Regulatory policies impact SME compliance costs and operational flexibility.
SME Impact Example:
- A Sydney logistics SME saves $7,000 in compliance under Dutton’s deregulation but faces hiring challenges under Labor’s non-compete ban, increasing recruitment costs by $10,000.
Labor’s policies offer SMEs trade stability and housing-driven cash flow but impose higher tax and regulatory burdens. Dutton’s deregulation and tax relief enhance SME liquidity and investment, yet protectionism and spending cuts risk trade and revenue disruptions. SMEs should independently weigh these impacts to determine the best path for their business.
1. How will the 2025 election affect small and medium businesses?
The outcome of the May 2025 election will influence key areas like tax, trade, cash flow, and regulation. Policies from Labor and the Coalition could shift investment decisions, staffing, costs, and growth opportunities across a wide range of industries.
2. What tax changes are Labor proposing for SMEs?
Labor has introduced a $1,000 instant deduction for employee work-related expenses, aiming to simplify claims. However, it plans to reduce the Instant Asset Write-Off to $1,000 from July 2025, which may limit investment incentives for SMEs.
3. What is the Coalition’s tax policy for small business?
The Coalition proposes a $30,000 Instant Asset Write-Off for SMEs with turnover under $10 million, supporting investment in tools and software. It also offers a $1,200 tax offset for individuals earning up to $144,000, which may boost spending at small businesses.
4. Which party offers better support for investing in business assets?
The Coalition’s higher Instant Asset Write-Off encourages larger purchases like equipment or software. Labor’s $1,000 cap restricts the benefit but offers broader deductions to employees with minimal admin.
5. How will each party's trade policy affect SMEs?
Labor supports trade stability, backing export-focused manufacturing like Tasmania’s paper mill and limiting foreign homebuyers to manage cost-of-living. The Coalition leans toward protectionism, prioritising local energy supply and migration cuts, which could strain export industries.
6. Will migration cuts affect SMEs?
Yes. The Coalition’s plan to cut migration and student visas may lead to labour shortages, increasing wage pressure for SMEs in hospitality, healthcare, and education sectors.
7. Are there any cash flow benefits for SMEs under Labor?
Yes. Labor’s $10 billion housing plan creates contracts for construction SMEs and related suppliers. A $150 energy rebate also eases operating costs. However, renewed ATO debt collection has added pressure to cash-strapped businesses.
8. How does the Coalition support SME cash flow?
The Coalition’s halved fuel excise reduces transport costs for delivery and logistics firms. Its $5 billion infrastructure investment may create new work for construction and related SMEs, although spending cuts could reduce public contracts long-term.
9. What are the implications for compliance and admin?
Labor increases ATO and ASIC funding to fight tax avoidance and phoenixing, helping compliant SMEs. However, new monthly GST reporting for non-compliant SMEs adds admin time. The Coalition aims to reduce red tape, especially in logistics and energy sectors.
10. What hiring changes are being proposed?
Labor plans to ban non-compete clauses for employees earning under $175,000, which may widen the talent pool for SMEs. The Coalition hasn’t proposed changes to hiring practices but its migration cuts could reduce available labour.
11. How do energy policies compare between the parties?
Labor focuses on rebates and housing-led demand, while the Coalition proposes deregulated approvals for gas projects and explores nuclear energy. These plans impact manufacturing and energy-intensive businesses differently, depending on their timelines and costs.
12. Will education and training SMEs be affected?
Yes. The Coalition’s plan to cut 80,000 student visas could cost the sector $4.3 billion, directly affecting private education and training providers. Labor supports international student growth, keeping this revenue stream stable for now.
13. What should SMEs do in response to these policy differences?
SMEs should evaluate how policies affect their specific industry, cost base, and workforce. Consider the trade-offs between tax relief and regulatory compliance, or infrastructure investment and labour availability. Speak with an advisor or accountant before making strategic changes.
This article outlines some potential tax implications, and as tax law interpretations vary and are not yet in force, SMEs should use these examples for illustrative purposes only.
Scale Suite delivers finance and human resource services to support the growth of Australian businesses. Our Sydney-based team creates custom packages tailored to your needs, seamlessly integrating with your existing teams. From comprehensive finance services and strategic business support to recruitment and HR services, we reduce costs, save time, and help you scale confidently.
Ready to stop wasting time on finance & HR tasks and start focusing on growth?
Our business experts will assess your current setup and show you exactly how much time and money you could save with our tailored services.
No lock-in contracts and a 30 day money back guarantee. We help you choose only the services that fit your business needs and you pay for exactly what you use. Pause our services at any time.
