Restructuring Charges in Australia 2025: What Businesses Need to Know

Restructuring charges are back in the spotlight as Australian companies adapt to economic uncertainty, shifting consumer trends, and fresh regulatory changes in 2025. Whether you’re an investor, business owner, or simply curious about the finance headlines, understanding these charges is crucial for decoding balance sheets and making informed decisions.

What Are Restructuring Charges?

Restructuring charges are one-off expenses that companies incur when they reorganise their operations. These can include costs related to layoffs, closing facilities, discontinuing product lines, or integrating acquisitions. In Australia, the spotlight on restructuring has intensified in 2025 due to ongoing sector shakeups in retail, manufacturing, and tech.

• Redundancy payouts: The most visible restructuring cost, particularly when large employers like Myer or Qantas announce workforce reductions.
• Asset write-downs: Costs from shutting down or selling underperforming business units or physical assets.
• Contract termination fees: Breaking leases or supplier contracts ahead of schedule to streamline operations.

For example, after the 2024 retail sector downturn, many companies reported millions in restructuring charges as they closed stores and invested in e-commerce upgrades.

2025 Policy Updates and Financial Reporting

This year, the Australian Accounting Standards Board (AASB) has rolled out new guidance (AASB 137 updates) clarifying how and when restructuring charges should be recognised on financial statements. The aim: prevent companies from using restructuring provisions to artificially smooth profits or hide recurring costs.

• Tighter definitions: Only direct, necessary, and demonstrable costs can be booked as restructuring charges.
• Enhanced disclosure: Firms must now detail the nature, amount, and timing of charges, as well as their expected benefits.
• Scrutiny from regulators: The Australian Securities and Investments Commission (ASIC) is monitoring the use of restructuring charges to ensure transparency for investors.

For instance, in early 2025, a leading ASX-listed telco faced ASIC questions after booking significant restructuring expenses while simultaneously reporting higher executive bonuses. Enhanced disclosures helped clarify the true impact of the changes and reassured shareholders.

Real-World Impacts: Investors, Employees, and Business Strategy

Restructuring charges can be a double-edged sword. On one hand, they signal a company is taking decisive action to improve efficiency or adapt to market conditions. On the other, they can mask deeper problems if used repeatedly.

• For investors: One-off charges can temporarily depress profits, but might be a sign of future growth if the restructuring is well-planned. Look for clear management explanations and follow-up results.
• For employees: Restructuring often means redundancies or changes to workplace structure. In 2025, there’s increased focus on fair redundancy packages and upskilling support, especially as automation accelerates in logistics and services.
• For business owners: Understanding the tax treatment of restructuring costs is crucial. While many are deductible, the ATO has tightened rules around what qualifies. Consulting a tax professional is essential before executing a major restructuring.

Australian companies like Woolworths and Telstra, which have undergone significant restructures in recent years, illustrate both the risks and rewards. When executed transparently and strategically, restructuring charges can pave the way for stronger long-term performance.

How to Read Between the Lines

Not all restructuring charges are created equal. Savvy readers should:

• Check if the charges are truly non-recurring, or if they appear year after year.
• Review management’s explanation in annual reports and ASX releases.
• Compare restructuring costs to the company’s size and sector peers.
• Watch for follow-up results: Did performance actually improve post-restructure?

In 2025, with increased regulatory scrutiny and public awareness, transparency around restructuring charges is higher than ever. For investors and employees alike, understanding the story behind the numbers is essential.