Leaseback in Australia: 2025 Guide to Unlocking Business Capital

With economic conditions shifting and interest rates settling into new territory in 2025, Australian businesses are exploring innovative ways to manage cash flow and assets. Leaseback, once a niche strategy, has surged in popularity as both a cash-injection tool and a way to streamline balance sheets. But what exactly is leaseback, how does it work under current Australian regulations, and who stands to benefit most?

What Is Leaseback? The Fundamentals

Leaseback (or sale and leaseback) is a financial arrangement where a business sells an asset—often property, equipment, or vehicles—to a financier or investor, then immediately leases it back. This means the company gets a lump-sum cash payment but continues using the asset for an agreed period.

• Unlocks capital tied up in owned assets

• Improves cash flow without disrupting operations

• Transfers some risks (such as depreciation or obsolescence) to the new owner

In Australia, leaseback deals have become particularly attractive for SMEs and larger enterprises needing to free up funds for growth, debt reduction, or new opportunities.

2025 Policy Landscape: What’s Changed?

Several policy and market updates in 2025 have reshaped the leaseback space in Australia:

• Taxation: The ATO’s 2025 guidelines clarify that leaseback payments are generally deductible as operating expenses, but the sale may trigger capital gains tax (CGT) depending on the asset type and ownership structure.

• Asset Classes: Beyond commercial real estate, leaseback deals now commonly cover fleets, manufacturing equipment, and even renewable energy installations (solar panels, EV charging stations).

• Accounting Standards: Post-AASB 16, businesses must recognize most leases on the balance sheet, so CFOs are weighing the long-term impact on reported liabilities and asset values.

• Financing Rates: As RBA rates stabilise in the 4.1–4.3% range, leaseback can be more cost-effective than traditional term loans, particularly for companies with strong assets but tight cash reserves.

These changes mean it’s more important than ever to structure deals carefully and understand the financial implications from day one.

Real-World Examples: Leaseback in Action

Let’s look at how Australian businesses are leveraging leaseback in 2025:

• Manufacturing Firm: A Sydney-based manufacturer sold $2 million worth of machinery to a specialist financier, then leased it back over five years. The upfront cash funded a new product line and helped smooth out supply chain hiccups.

• Transport Operator: Facing rising vehicle costs, a regional bus company executed a leaseback on its depot property. The capital raised was used to electrify its fleet, aligning with new state sustainability incentives.

• Medical Practice: With commercial property values peaking, a Melbourne clinic sold its premises to a REIT and locked in a 10-year lease. This move allowed the partners to access equity for expansion without relocating or losing control over their workspace.

These examples highlight the flexibility of leaseback, from unlocking trapped equity to enabling strategic pivots or capitalising on market opportunities.

Key Considerations Before Entering a Leaseback Deal

While leaseback can be a powerful tool, it isn’t a one-size-fits-all solution. Here’s what to weigh up:

• Future operational needs: Ensure the lease terms align with your long-term business plans—exiting early can be costly.

• Impact on balance sheet: Under current accounting rules, leases increase reported liabilities; factor this into financial projections and covenant tests.

• Tax outcomes: Seek up-to-date tax advice on CGT, GST, and deductibility, as 2025 rules differ from pre-pandemic norms.

• Market conditions: If asset values are high, selling now could lock in gains; in a soft market, a leaseback may not realise optimal value.

• Counterparty strength: Choose reputable lessors—especially for long-term deals involving mission-critical assets.

With careful structuring and the right timing, leaseback can provide vital liquidity and operational flexibility.

Is Leaseback Right for Your Business?

As 2025 unfolds, leaseback arrangements are set to play a growing role in Australian business finance—especially for asset-rich companies looking to stay agile. With new policy clarity and a broader range of eligible assets, now is an ideal time to assess whether leaseback could unlock capital for your next move.