Asset write-off offers relief as hospitality closures hit record high

Hospitality closures have reached an unprecedented 9.3 per cent—one in 11 businesses—in the 12 months to February 2025, up from 7.1 per cent in the same period last year, according to the latest CreditorWatch Business Risk Index.

The asset write-off extension, announced by Prime Minister Anthony Albanese, allows small businesses to immediately claim deductions for assets under $20,000, enhancing cash flow at a critical time for the industry.

“We want people to invest now,” Albanese said when questioned about making the measure permanent.

“If you just leave it there, then there’s no incentive to go out there and make sure that you tool up your business, that you invest and you create that multiplier impact now.”

Chartered Accountants Australia and New Zealand senior tax advocate Susan Franks welcomed the extension but argued it doesn’t resolve the underlying issue of uncertainty.

“Since 2015, the instant asset write-off initiative used by small businesses to claim a deduction for the cost of an asset has been clouded with uncertainty,” Franks said.

“It has been extended by governments in power at the time, again and again, often right before it’s due to expire.”

The announcement comes as foodservice and hospitality businesses face escalating costs across multiple fronts—from food price increases to energy bills, insurance premiums, wage rises and higher rents.

CBD-based restaurants and cafes have been particularly hard hit, with reduced foot traffic as more Australians work from home. Meanwhile, cost-of-living pressures have forced consumers to cut back on discretionary spending, including dining out.

For restaurant operators, the asset write-off extension offers an opportunity to help offset rising labour costs, upgrade equipment or invest in technology solutions that could help offset rising operational costs. Industry experts are urging caution, noting that businesses should carefully assess their financial position before making investment decisions in the current climate.

CreditorWatch CEO Patrick Coghlan described the current business environment as “precarious”, with B2B invoice payment defaults—a key measure of business stress–up 47per cent year-on-year.

“The expected slowdown in economic growth from the widespread US tariff regime will, unfortunately but inevitably, result in higher insolvencies,” Coghlan said.