What’s happening: The Australian government has extended the $20,000 instant asset write-off for another year, providing small businesses with temporary relief.
Why this mattersSmall businesses are facing mounting pressure from multiple directions: late payments costing an average of $2,500 monthly, Payday Super legislation coming into effect in July 2026, and annual policy extensions that make long-term planning impossible.
The immediate asset write-off has been extended again, crossing the $20,000 threshold until June 2026. This is welcome news for small businesses, but industry leaders say this only solves half the problem.
Ian Boyd, General Manager ANZ at GoCardless, has been advocating for this expansion for years, but his response has been measured rather than celebratory.
“We have been strong supporters of the immediate write-down of $20,000 assets for years, so we are very pleased to see this extended into next year. As long as inflation remains persistent, initiatives like this are critical to giving companies the breathing room needed to keep their financials stable,” Boyd said.
But breathing space is not the same as a solution. Behind the headlines about tax breaks, a cash flow crisis is quietly strangling Australian small businesses.
Credit facilities as life rafts
GoCardless’s latest Pursuing Payments report has revealed something alarming: more than one in three businesses have turned to credit facilities because late payments have affected their cash flow.
Boyd is blunt about what this means. “What is needed beyond the write-off is a more comprehensive, long-term support strategy for small to medium businesses. We need to encourage customers to support local businesses and alleviate the pressures of sluggish cash flow and escalating overhead costs. The proposed ban on card surcharges will hardly solve this problem; we need a complete overhaul of all payment surcharges to ensure that businesses are not overburdened with unavoidable costs that impact the bottom line and damage customer relationships,” he says.
The proposed ban on card surcharges has been positioned as a win for consumers, but Boyd sees it as a distraction from the real issues facing businesses. Payment fees are a problem. Late payments are the killer.
“In addition, businesses need to be better able to recover outstanding payments. Our latest Pursuing Payments report shows that more than 1 in 3 businesses have turned to credit facilities because late payments have affected their cash flow. It is clear that the immediate write-off of $20,000 of assets is not enough for businesses to stay afloat,” says Boyd.
The statistics paint a bleak picture. Companies spend an hour every week chasing down overdue payments. That’s 52 hours a year spent on administrative work that generates zero revenue and affects morale.
The automation solution
Boyd believes technology provides part of the answer, and that companies are willing to embrace it. “More than two in three companies are interested in introducing new technology to get paid faster and reduce failed payments,” he says.
Direct debit payments and PayTo, the updated equivalent, provide a solution by withdrawing payments with the customer’s prior consent on the day they are due. No hunting. No delays. No failed payments that affect margins.
But Boyd argues that the government needs to do more than simply expand tax breaks. “That means the federal government needs to give companies more incentives to better automate the backbone of their operations, including payments, along with extending depreciation. This could take the form of software rebates, as we’re seeing in Malaysia and Singapore, which support the government’s goals of increasing productivity and closing the payment timeline gap. Without that, these initiatives only solve half of the cash flow,” he says.
Other countries have recognized that digital transformation requires financial support. Malaysia and Singapore offer software discounts to help businesses modernize their payment systems. Australia’s approach has been more cautious, relying on tax breaks rather than direct incentives for automation.
Payday Super busy
While late payments drain money on one side, new compliance obligations increase pressure on the other.
Rob Dunn, General Manager of Benefits and Superannuation at Employment Hero, sees the immediate write-off of assets as critical timing, especially with the Payday Super legislation coming into effect on 1 July 2026. “This legislation is critical for small businesses. By easing cash flow pressures and reducing tax burdens, it frees up capital for owners to invest in better tools, expand their services and hire more staff,” said Dunn.
The write-off gives companies time to prepare, but Dunn is clear about the coming storm. “This is particularly important in an environment where we continue to see the costs of small business employment administration rise due to ongoing regulatory changes and new compliance obligations, such as the Payday Super laws coming into effect on 1 July 2026. Certainty now for the 2025-2026 financial year gives employers the breathing space to plan how they will use the immediate write-off of assets to strengthen their cash flow and systems before changes such as Payday Super come into effect,” says Dunn.
Payday Super requires companies to pay superannuation on the same day as wages, rather than quarterly. It sounds simple, but the consequences for cash flow are significant. Companies will need to shift substantial amounts into their working capital cycle from day one, putting pressure on already tight budgets.
Put an end to the annual uncertainty
Dunn’s frustration with the annual renewal cycle is palpable. “But we cannot continue to rely on one-year renewals at a time. Annual changes force employers to operate in uncertainty while planning ahead. In a rapidly changing economic environment, small businesses need permanent instantaneous asset write-downs. When employers can rely on stable tax institutions, they invest with more confidence in their operations and, most importantly, in their people,” he says.
The pattern has become predictable. Every budget brings speculation about whether depreciation will continue. Companies wait and cannot make purchasing decisions until they know the rules. Then comes the extension, which only offers twelve months of security before the cycle repeats itself.
Boyd echoes this concern from a different perspective. “SMEs are the lifeblood of our economy, and if we don’t do more to strengthen their support network, the ripple effect on our wider economy could worsen,” he says.
Small businesses employ millions of Australians and generate billions in economic activity. When they struggle, the effects ripple through supply chains, labor markets and local communities.
The immediate postponement of asset write-downs is a positive step, but both Boyd and Dunn are clear: it is not enough. Late payments force companies into debt. Compliance costs are rising. Policy certainty is measured in twelve-month increments.
Australian small businesses need more than temporary help. They need comprehensive reforms that address payment delays, reduce administrative burdens and provide the long-term certainty needed to plan and invest with confidence.
Until that happens, business owners will continue to spend hours chasing payments, scrambling for credit, and hoping that next year’s budget delivers something more substantial than another one-year extension.
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