Written by Simeon Duncan, Head of Corporate Affairs and Public Policy APAC, Intuit
Daniel and Eloise run a café called Coffee Co. According to Treasury’s own Budget night example, they were planning to spend $55,000 on a new coffee machine, tables, chairs and outdoor heaters before tonight. Under the now-permanent $20,000 instant asset write-off (IAWO), they can deduct all of it immediately. With loss carry-back also made permanent, they get a $3,750 tax refund on top.
It’s a small example. There are 2.67 million small businesses in Australia, employing two-thirds of the private workforce and contributing more than 55 per cent of GDP. Most of them aren’t deciding on coffee machines. They’re deciding whether to hire another part-timer, upgrade a ute, take on more shifts, or hold off another quarter. The instant asset write-off is one of the few tax measures small business owners and their accountants can explain to each other in a single sentence. Tonight, after years of temporary extensions, it stopped being temporary.
That matters more than the dollar figure suggests. Intuit’s pre-Budget submission asked for three things: a permanent $20,000 instant asset write-off; reform of the Consumer Data Right; and a SMB Productivity Credit to subsidise the adoption of AI-enabled tools. The Budget delivered the first, made a substantial down payment on the second, and left the third for the next cycle.
On CDR, the $62 million extension is meaningful, particularly the pilot to make ATO-held data accessible through the CDR framework. That was a specific recommendation in Intuit’s submission, and it’s the kind of measure that creates additional real-world use cases for the CDR. Adding government data to the system gives accountants and bookkeepers something tangible to plug into. It’s an idea pinched from the UK Open Banking playbook, and it’s a smart pinch.
The Productivity Credit, a tax offset for small businesses that adopt AI-enabled tools, isn’t in the papers tonight. The adjacent measures are: AI.gov.au launched on 8 May; Round 3 of the Digital Solutions program will refocus on AI from 1 July; and $70 million is going into AI Accelerator grants through the Cooperative Research Centres program. These will help. But they’re institutional moves. The Productivity Credit is a small business measure, designed to put the decision in the hands of the owner and the eligibility test in the receipts they already keep. It’s harder to game, simpler to administer, and reaches businesses that won’t ever fill in a CRC grant application. The case for it gets stronger every year, not weaker.
The Treasurer framed this Budget as ‘resilience and reform’ against the global oil shock. Most of the productivity pillar is in there: the $10.2 billion regulatory burden reduction, the National Competition Policy reforms, the loss carry-back permanence, the venture capital expansion, the R&D Tax Incentive overhaul. For SMBs specifically, there are also dynamic monthly PAYG instalments from 2027, the ATO removing interest charges on accidental instalment variation errors, and free access to mandatory standards (a small thing that saves small electrical and plumbing firms around $1,600 a year).
What’s missing is a coherent demand-side measure for digital adoption. Australia has plenty of supply-side activity: AI.gov.au, the Cooperative Research Centres, the MOUs with Anthropic and Microsoft, a Productivity Commission estimate that AI could add 4.3 per cent to productivity over the decade. What we don’t yet have is a mechanism that puts AI-enabled tools into the hands of the businesses that would benefit most. ABS data already shows 28 per cent of SMBs have adopted AI tools, and OECD research suggests those that have report productivity gains of 10 to 25 per cent. The other 72 per cent are the policy gap.
There’s a clear gap, an evidence base, and a fiscal envelope that could be filled with something more targeted than another grant round. The Productivity Commission inquiry into business dynamism announced in this Budget is another lever; its terms of reference should include digital adoption barriers as a category in their own right, not as a sub-set of general regulation.
There’s plenty for the small business community to welcome tonight. The IAWO permanence ends years of waiting. The CDR investment picks up a long-standing recommendation. The loss carry-back and refundability measures give businesses room to invest through downturns. None of that is small.
The work that follows is closing the digital adoption gap deliberately, with a measure small business owners can use without filling in another form.
Simeon Duncan, Head of Corporate Affairs and Public Policy APAC, Intuit
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