AFIA welcomes SME support and red tape reform in Federal Budget

Australian Finance Industry Association (AFIA) has welcomed the Australian Federal Budget’s focus on productivity, regulatory reform and business resilience, while urging policymakers to maintain long-term confidence across investment and housing markets.

The industry body said the Budget included several measures that would help businesses navigate ongoing economic pressure, supply chain disruption and rising operating costs, particularly for SMEs.

“The permanent extension of the IAWO is a huge win for small businesses following years of uncertainty around the policy, hindering planning and investment,” she said.

“SMEs, which are battling higher operating costs, need long-term policy certainty to embrace capital upgrades and to invest.”

The association also welcomed measures aimed at reducing administrative burdens across the financial services sector, including plans to streamline regulatory frameworks and disclosures, expand consumer data right initiatives and increase ATO data-sharing capabilities.

The Budget included A$654.3 million in funding for digital identity systems designed to reduce compliance and administrative pressures for smaller businesses.

AFIA said additional reforms, including a 10-year extension of the Small Business Responsible Lending Obligation exemption, would further support lending activity and business investment.

“These reforms, coupled with credit-supportive measures like extending the Small Business Responsible Lending Obligation exemption for a further 10 years, will help businesses shrug off economic challenges and focus on growth, productivity and contributing to our vibrant economy,” Tate said.

The association also welcomed the government’s decision to maintain fringe benefits tax exemptions for existing electric vehicle arrangements while introducing a phased transition to a 25% FBT discount for EVs by 2029.

AFIA said the policy would help maintain confidence in Australia’s growing EV market at a critical point in the country’s energy transition.

“The government is phasing out the FBT exemption by 2029, at which point a 25 per cent FBT discount will be available for EVs,” Tate said.

“Our industry data shows EV uptake is building, especially with the immediate fuel market shock – and it is important policy change takes a long-term view and doesn’t threaten this momentum.”

The government also committed A$40 million towards expanding EV charging infrastructure, a move AFIA said would help address ongoing consumer concerns around charging accessibility and range anxiety.

Alongside business and transport measures, AFIA is assessing the wider implications of significant changes to Australia’s property tax framework, including reforms to negative gearing and capital gains tax arrangements due to take effect from July 2027.

The association noted the government had paired the tax reforms with additional supply-side housing measures, including a A$2 billion local infrastructure fund and A$227 million to accelerate planning and environmental approvals.

“Challenges in our housing markets are inherently structural, so changes to CGT and negative gearing need to be supported by broader supply-side reform to address painful planning and infrastructure shortfalls,” Tate said.

AFIA also warned that the capital gains tax changes represented one of the most significant structural shifts to Australia’s investment environment in more than two decades and said maintaining investor confidence would be critical.

“The government has delivered a stark tax reform package and it is critical these changes help support investor confidence, rather than undermine it,” Tate added.

“We urge the government to give the same consideration to this impact, as it does to the intergenerational impact of the Budget.”