Business leaders welcome the $20k instant asset write-off extension but warn late payments are forcing one in three SMBs into credit facilities
What’s happening: The Australian government has extended the $20,000 instant asset write-off for another year, offering temporary relief to small businesses.
Why this matters: Small businesses are facing mounting pressure from multiple directions: late payments draining an average of $2,500 monthly, Payday Super legislation arriving in July 2026, and annual policy extensions that make long-term planning impossible.
The instant asset write-off has been extended again, pushing the $20,000 threshold through to June 2026. It’s welcome news for small businesses, but industry leaders say it’s only addressing half the problem.
Ian Boyd, General Manager ANZ at GoCardless, has been advocating for this extension for years, yet his response is measured rather than celebratory.
“We have been big advocates of the $20,000 instant asset write-off for years, so we’re very happy to see it extended into next year. For as long as inflation remains sticky, initiatives like this are key to providing businesses the breathing room needed to keep their financial situation steady,” Boyd says.
But breathing room isn’t 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 impacted their cash flow.
Boyd is blunt about what this means. “What is needed in addition to the write-off is a more comprehensive long-term support strategy for small-to-medium businesses. We need to encourage patrons to support local businesses and to ease the pressure of slow cash flow and escalating overheads. The proposed ban on card surcharges hardly solves this issue; we need a full review of all payment surcharges to ensure businesses aren’t being overburdened with unavoidable costs that impact the bottom line and harm customer relationships,” he says.
The proposed card surcharge ban has been positioned as a win for consumers, but Boyd sees it as a distraction from the real issues businesses face. Payment costs are one problem. Late payments are the killer.
“Additionally, businesses need to be better empowered to recoup outstanding payments. Our latest Pursuing Payments report revealed that more than 1 in 3 businesses have turned to credit facilities because late payments have impacted their cash flow. Clearly, the $20k instant asset write-off isn’t enough for businesses to keep their heads above water,” Boyd says.
The statistics paint a grim picture. Businesses are spending an hour each week chasing late payments. That’s 52 hours a year spent on admin work that generates zero revenue and drains morale.
The automation solution
Boyd believes technology holds part of the answer, and businesses are ready to embrace it. “More than 2 in 3 businesses are interested in introducing new technology to get paid more quickly and to reduce the rate of failed payments,” he says.
Direct Debit payments and PayTo, the updated equivalent, offer a way forward by pulling payments with a customer’s prior consent on the day they’re due. No chasing. No delays. No failed payments eating into margins.
But Boyd argues the government needs to do more than simply extend tax breaks.”That means the Federal Government should be providing greater incentives for businesses to better automate the backbone of their operations, including payments, in tandem with extending the write-off. This could take the form of rebates for software, as seen in Malaysia and Singapore, that support the government’s aims of increasing productivity and closing the gap on payment times. Without that, these initiatives only solve half the cash flow equation,” he says.
Other countries have recognised that digital transformation requires financial support. Malaysia and Singapore offer software rebates that help businesses modernise their payment systems. Australia’s approach has been more cautious, relying on tax breaks rather than direct incentives for automation.
Payday Super pressure
While late payments drain cash from one side, new compliance obligations are tightening the pressure from the other.
Rob Dunn, General Manager of Benefits and Superannuation at Employment Hero, sees the instant asset write-off extension as critical timing, particularly with Payday Super legislation commencing on 1 July 2026. “This legislation is critical for small businesses. By easing cash flow pressures and reducing the tax burden, it frees up capital for owners to invest in better tools, expand their services and hire more staff,” Dunn says.
The write-off gives businesses a window to prepare, but Dunn is clear about the storm that’s coming. “It’s especially important in an environment where we continue to see the cost of employment administration rising for small businesses due to constant regulatory change and new compliance obligations, such as the Payday Super laws commencing on 1 July 2026. Certainty now for the 2025–26 financial year gives employers the breathing room to plan how they’ll use the instant asset write-off to strengthen their cash flow and systems before changes like Payday Super take effect,” Dunn says.
Payday Super will require businesses to pay superannuation on the same day as wages, rather than quarterly. It sounds simple, but the cash flow implications are significant. Businesses will need to shift substantial amounts into their working capital cycle from day one, adding pressure to already stretched budgets.
End the annual uncertainty
Dunn’s frustration with the annual extension cycle is palpable. “But we can’t keep relying on one-year-at-a-time extensions. Annual changes force employers to operate in uncertainty when they should be planning ahead. In a rapidly changing economic environment, small businesses need a permanent instant asset write-off. When employers can rely on stable tax settings, they invest more confidently in their operations and, most importantly, in their people,” he says.
The pattern has become predictable. Every budget brings speculation about whether the write-off will continue. Businesses wait, unable to make purchasing decisions until they know the rules. Then the extension comes, offering just twelve months of certainty before the cycle repeats.
Boyd echoes this concern from a different perspective. “SMBs are the pulse of our economy, and if we don’t do more to reinforce their support network, the ripple effect on our broader economy could worsen,” he says.
Small businesses employ millions of Australians and generate billions in economic activity. When they struggle, the effects cascade through supply chains, employment markets, and local communities.
The instant asset write-off extension is a positive step, but both Boyd and Dunn are clear: it’s not enough. Late payments are forcing businesses into debt. Compliance costs are rising. Policy certainty is measured in twelve-month increments.
Australian small businesses need more than temporary relief. They need comprehensive reform that addresses payment times, reduces administrative burden, and provides the long-term certainty required to plan and invest with confidence.
Until that happens, business owners will continue spending hours chasing payments, scrambling for credit, and hoping next year’s budget brings something more substantial than another one-year extension.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
