Australia’s business community has delivered a mixed response to this year’s federal Budget, with frustration and relief in equal measures.

Across the board, there’s recognition the government is trying to strike a balance between easing cost-of-living pressure, lifting productivity and keeping inflation in check. Yet when it comes to small business, the verdict is suggests there are plenty of gaps and a few red flags amongst the wins,

From tax experts to tech players, retailers to startup founders, the big themes are consistent: support for businesses is welcomed, but confidence is fragile and the tax changes have many people nervous.

Small business wins

So, let’s start with the positives, because there are a few.

The decision to make the $20,000 instant asset write-off permanent is one of the most widely welcomed moves in the Budget. For years, small business owners have dealt with the stop-start nature of this policy, making it harder to plan investments with confidence. Making the instant asset write-off permanent, finally, gives businesses a bit of certainty.

MYOB CEO Paul Robson said at times like this, that matters more than it might seem on paper.

“Small and medium businesses are managing rising employment costs, new compliance obligations, changing regulatory settings as well as softer economic conditions,” he said.

“Making the Instant Asset Write Off permanent removes some of the uncertainty that has made it harder for businesses to invest with confidence in the past.”

There’s also been widespread support for the return of loss carry-back provisions, which allow businesses to offset current losses against previously paid tax. This is tangible help for businesses dealing with patchy revenue due to the economic downturn. It effectively gives them some cash back when it’s needed most.

Add to this the fuel and supply chain investments,  including a $10 billion fuel and fertiliser security package, and you can see some relief in sectors like transport, agriculture and logistics.

“Fuel remains the single biggest cost pressure facing SMEs,” Robson said. “A domestic fuel and fertiliser security package of this scale is a meaningful long-term investment into Australian businesses and supply chains.”

It’s a few solid measures that should ease some business pressures.

Small business pressures continue

Unfortunately, with the war in the Middle East ongoing, inflation rising and the cost of living and doing business continuing to be impacted, none of that pressure is going anywhere, any time soon.

Small businesses are still dealing with rising costs across pretty much every line item: wages, rent, energy, insurance, freight, compliance. All while demand is softening.

Dr Ben Zhe Wang from Macquarie University says the pressure on margins is only expected to get worse.

“More businesses expect demand, industry conditions, and access to credit to deteriorate than to improve.”

A big part of the problem? Businesses can’t always pass on those rising costs.

“Many businesses report difficulty raising prices because of concerns about losing customers or moving ahead of competitors.”

So while the Budget might offer some relief around the edges, it doesn’t fundamentally shift the trading conditions many small businesses are facing. Even the modest tax cuts aimed at households,  including a roughly $250 benefit, are seen as helpful, but not game-changing.

On balance, Wang says the Budget is probably a net positive… just not a transformative one.

Confidence is the real battleground

If there’s one thread running through all the commentary, it’s confidence, or more accurately, the lack of it.

According to MYOB research, half of all small businesses say this Budget will directly influence their investment decisions. But the numbers behind that are telling.

• Only 19 per cent reported revenue growth over the past year.
• Sixty-seven per cent expect the economy to soften further.
• And 65 per cent say they’ll delay investment or hiring if their priorities aren’t met.

That’s not exactly a sector ready to charge ahead.

“SMEs are resilient, ambitious and ready to grow, but without confidence in the road ahead, the decisions to invest, hire and expand become more challenging,” Robson said.

Small business investment is a key driver of jobs, innovation and economic growth so this reluctance to growth is bad news for the economy.

Tax changes trigger the biggest divide

If the asset write-off is the Budget’s biggest win with business, tax reform is easily its most controversial piece. The proposed changes to capital gains tax, negative gearing and trust distributions have sparked strong reactions, and not all in the same direction.

On one side, tax experts like  Mark Chapman Direct or Tax cCmmunciation at H&R Block sees the reforms as overdue.

Chapman described the package as “one of the most substantive tax reform packages in a generation,” arguing it begins to rebalance a system that has long favoured wealth accumulation through property and investment.

The shift away from the flat 50 per cent CGT discount toward indexation and a 30 per cent minimum tax is, in his view, a more logical way to tax real gains.

There are also transition measures, including grandfathering existing investments, designed to soften the blow.

But that’s only one side of the story.

Startups and founders say CGT changes stifle ambition

In the startup world, the reaction has been far less forgiving. Pred Dragila, CEO of Fat Zebra, was far from complementary

“We’ve just killed the reward to create new businesses, create jobs and lead new industries,” he said.

For founders, the trade-off has always been: years of risk, lower pay and uncertainty, in exchange for a potential payoff if the business succeeds.

“The inevitable result is that ambitious Aussies will take their ideas and businesses overseas, or simply choose safer career paths.”

Others echoed the concern, particularly around how the rules will apply to startups. JobAdder CEO Martin Herbst said the detail, especially around grandfathering and carve-outs, will be critical.

“Without a specific carve-out for startup founders and employees, these CGT changes risk setting the ecosystem back years.”

Felicia Coco, founder of Pressto AI, framed it even more simply.

“Capital flows to where it’s welcome, and right now, countries like Singapore and the UAE are rolling out the red carpet while we’re putting up roadblocks.”

Small business owners caught in the middle

For everyday small business owners, the concern is around how all these changes to CGT and trusts will impact their business. Many family businesses operate through trust structures, while other small businesses rely on the eventual sale of their business as a retirement plan. And many don’t have the time or resources to navigate complex tax changes.

Business groups warn that while the reforms may aim to improve fairness, they also risk making the system harder to understand and more expensive to navigate.

For some businesses, changing structures to adapt to the new rules could also be costly, time-consuming and disruptive, adding further pressure to already thin margins.

AI and productivity: big talk, light on delivery

Another area getting mixed reviews is the government’s push on AI and digital productivity. There’s broad agreement that the direction Chalmers has taken is right but many business advocates say the support doesn’t go far enough for small business.

Xero’s Angad Soin said small businesses aren’t looking for high-level strategies, they want practical help.

“Small businesses are not asking for AI to be treated as a future concept. They want support that helps them integrate it into their day-to-day business operations.”

“Macro investments in research and new government platforms are important, but not the practical support small businesses are seeking. Almost a quarter of those we surveyed said AI investment incentives were the single most important thing they wanted from the government.”

That sentiment is reiterated across the tech sector.

Workato’s John Deeb said initiatives like Digital ID and the “tell us once” approach are promising but risk falling short without proper execution.

“Reforms like ‘tell us once’ show the right ambition, but they will only deliver if agencies can connect the systems, data and workflows that sit underneath them.”

Even within AI, there’s a warning not to overcomplicate things.

Ian Boyd from GoCardless pointed out that many businesses could benefit from existing payment technologies right now, without waiting for AI frameworks.

Tough times for retailers

Retailers are another group watching the Budget fallout,  and while they’ve welcomed parts of the Budget, they’re not celebrating just yet. Australian Retail Council (ARC) chief economist Glenn Fahey said conditions remain challenging.

“Retailers continue to face intense pressure from a weak consumer outlook, rising operating costs and persistent uncertainty,” he said.

There’s also the broader economic context to consider. Consumer confidence is sitting at extremely low levels,  even below some points in the early 90s recession, which makes growth difficult. That said, there are some positives.

Fahey says measures like tax loss carry-back, the instant asset write-off and new rules targeting ultra-cheap offshore platforms are seen as steps in the right direction, but he was clear there’s still a long way to go.

“There are steps in the right direction but there is a long way to go to meaningfully improve competitiveness, reduce business costs and lift productivity.”

Productivity: the elephant in the room

Yep, everyone is dancing around the issue of productivity… The Budget talks about it. The government says it’s a priority, yet  many business leaders aren’t convinced the Budget’s measures go far enough.

Karlie Cremin from Dynamic Leadership Programs said there’s a missing link.

“Productivity gains do not happen automatically. They happen when leaders can set direction, communicate change, build trust and help teams perform.”

She also suggested there is a  mismatch between tax incentives and workplace realities, particularly for medium-sized businesses that sit outside many of the benefits but still carry heavy compliance burdens.

Then there’s the broader question: are we focusing on the right levers?

Technology, tax and regulation all matter, but without capability, leadership and confidence, productivity gains can stall.

What it all means for your business

So, where does this leave small business owners?

There are practical wins in this Budget, particularly around investment incentives and red tape. Measures like the instant asset write-off and loss carry-back will help at the margins. Still, the bigger picture hasn’t shifted dramatically.

Costs are still high. Confidence is still shaky. Meabwhile, the tax changes, depending on how they land, could reshape investment decisions in ways that aren’t full understood yet. Is it a cause for celebration? Probably not. Businesses need to work out what the changes mean for them and where the opportunities and risks lie. As they say, the devil’s in the details …