As we move into the latter half of 2025, Australian businesses are facing a dynamic economic situation. With inflation expected to stabilise, regulatory changes coming into effect, and global economic uncertainties, business owners must be proactive in managing financial risks and opportunities.

Superannuation Guarantee Increase: A Key Cost Factor

From 1 July 2025, the Superannuation Guarantee (SG) will rise to 12%, increasing mandatory employer contributions to employee superannuation funds. This means higher employment costs for businesses, particularly for those with a large workforce. Strategic cost management and forecasting will be essential to maintain profitability.

Minimum Wage Impact: One Year On

The 3.75% increase in the national minimum wage introduced in July 2024 has now been in place for almost a year. While some feared it would drive inflation, historical data suggests minimum wage hikes do not directly correlate with inflationary pressures. By now, businesses have adjusted pricing, streamlined operations, or improved efficiencies to absorb the impact. However, continued vigilance in monitoring labour costs and productivity remains critical.

Inflation Trends and Economic Forecasts

Inflation in Australia is expected to settle within the Reserve Bank of Australia’s (RBA) target range of 2-3% by December 2025, with trimmed mean inflation forecasted at 2.7%. This indicates a more predictable cost environment for businesses, making it an opportune time to refine financial strategies.

According to the RBA’s latest outlook, “The pick-up in GDP growth will flow through to tighter labour market conditions than we previously expected and will sustain some upward pressure on inflation.” While inflationary pressures are easing, businesses should remain cautious about potential changes in labour costs and consumer demand.

Business Tax Strategy: Staying Competitive Amid Cost Pressures

With operational costs rising due to increased superannuation obligations and ongoing wage adjustments, a well-planned business tax strategy is important.

Key tax considerations for businesses in 2025:

• Maximising deductions: Reviewing tax-deductible expenses, depreciation schedules, and investment incentives.
• Structuring business finances efficiently: Evaluating corporate structures for tax effectiveness.
• Utilising government incentives: Knowing about R&D tax incentives and small business concessions.

Managing Cash Flow and Financial Risks

Many small businesses struggle not due to a lack of revenue but because they fail to manage cash flow effectively. Poor cash management can lead to insolvency even for profitable companies. Key focus areas include:

• Operating budgets: Establishing clear financial projections.
• Cost control: Monitoring expenses against revenue growth.
• Debt management: Keeping liabilities within manageable limits.
• Pricing strategies: Passing on increased costs where necessary instead of absorbing them.

Global Trade and Economic Uncertainty

On the global stage, shifts in US-China trade relations and US fiscal policies could impact Australia’s economic outlook. The RBA warns, “Increased US tariffs on China present a headwind to growth in the two largest economies, and the possibility of higher or more widespread tariffs poses further risks to the global economy.” Australian businesses engaged in international trade should remain agile, adapting strategies to mitigate risks associated with tariffs and supply chain disruptions.

Take Control of Your Business

The second half of 2025 will bring both challenges and opportunities. Knowing your financial data, understanding business tax strategy implications, and managing costs effectively will be your ways to succeed. 

If you’re not sure about your financial position, now is the time to seek professional advice.

Contact us now to ensure your business is on the right track for the months ahead.