How the budget affects hospitality businesses

By now, you’ve probably heard of the personal income tax cuts from the 2025-26 federal budget. But what impacts will the changes have on hospitality businesses?

In yesterday’s budget address to parliament, Federal Treasurer Jim Chalmers noted 25,000 business have been created on average since Labor came to office.

“We respect and admire the hard work, aspiration and sacrifice behind those record numbers, which is why we’re going into bat for small and local businesses in this budget,” said Chalmers.

“Protecting them from unfair trading practices; funding our Buy Australian campaign to support local producers; providing new resources for the regulator to level the playing field for smaller players. And delivering tax relief for hospitality venues, brewers, distillers and wine producers.”

Good news for brews

In positive news for beer brewers, the government will pause indexation on draught beer excise and excise equivalent customs duty rates for two years from August 2025 to 2027. Indexation will continue to apply to excise for beer and spirits in bottles and cans.

Bad news for asset write-offs

The government’s instant asset write-off scheme remains in limbo. The scheme allows businesses with a turnover of less than $10 million to deduct the cost of assets up to $20,000 rather than depreciating them over time. The scheme is currently due to end at the end of the financial year, when it will revert to the earlier $1000 limit.

Energy bill relief

The government will spend $1.8 billion to extend its energy-bill relief to the end of 2025. This will see about 1 million small businesses receive another $150 in energy bill rebates.

Small business impacts

The government will provide $12 million over four years to support and protect small businesses, including:

• $7.1 million to strength regulatory oversight of the Franchising Code of Conduct – helping to protect vulnerable franchisees;
• $1.2 million to offer small loans to social enterprises, including work integration social enterprises, to support employment for disadvantaged Australians; and
• $0.8 million to develop and consult on options to extend protections against  unfair trading practices to small businesses and protect businesses regulated by the Franchising Code of Conduct from unfair contract terms and unfair trading practices.

Mixed reactions

While reactions to the budget have been mixed, financial institution CPA Australia said the budget left small businesses feeling ignored.

“SMEs – many of which have thin margins – needed a budget that would significantly alleviate the cost pressures they face every day,” said CPA Australia Chief Executive Officer Chris Freeland AM.

“The unrelenting rise in insurance premiums and the burden of utility bills, materials, wages, fuel and various other inflationary pressures are hard to manage.

“Though the emphasis on relieving pressures on household finances was expected, a more business-centric Budget would have benefitted all Australians because small businesses are significant contributors to the economy and job creation.”

Freeland also criticised the continued limbo of instant asset write-off, but said the $150 energy bill relief would assist businesses in managing soaring costs.

Independent Brewer’s Association (IBA) CEO, Kylie Lethbridge said that the draught tax freeze and proposed increase to the remissions cap by $50,000 were steps in the right direction.

“We, of course wish that these were more immediate and applied to all beer as we know they will not be enough to prevent some of the smallest independent breweries from closing,” said Lethbridge.

“It is clear that Prime Minister Albanese is looking to find ways to provide relief and we thank him for that – but at the same time, look forward to a commitment to more meaningful change to our unfair alcohol tax regime and initiatives that would support Australian-owned small brewing businesses.”

More details and the full budget can be accessed on the Australian Government website.

Photography by Daniel Reche.