Manufacturing
What an accountant for manufacturing businesses covers
In 2022/23 manufacturing made up 12.0% of full-time equivalent jobs in Ipswich, against 7.0% across Queensland. Most of the year-end tax work sits in two areas.
Trading stock valuation
Raw materials and finished lines are counted as near to the end of the income year as practical. Each line is then priced on one of three bases the ATO accepts, and any rise in total stock is taxed as income.
R&D tax offset
A company that incurs at least $20,000 of notional deductions on eligible R&D activities may claim the R&D Tax Incentive. Below $20 million aggregated turnover the offset can be refundable, and we work it into the company tax return and its records.
Our approach to manufacturing
How a manufacturing accountant reads your production numbers
Production ties up cash in stock, machinery and wages. Each one has its own tax treatment.
Cash moves out through raw materials, plant and a production payroll long before finished goods are sold, and each stage carries its own rules, from stocktake valuations to depreciation of plant over its effective life. A growing production team can also bring Queensland payroll tax into play.
We prepare your financial statements, tax returns and BAS with those rules in view, so stock, cost of goods sold and plant are treated consistently from one year to the next. The same figures then feed our cash flow, budgeting and profitability analysis for the business.
Timing plant and equipment purchases
For businesses under $10 million aggregated turnover, the instant asset write-off covers eligible assets under $20,000 each. Dearer plant is depreciated, so we plan when purchases are installed ready for use.
Payroll tax on production wages
Queensland payroll tax starts above $1.3 million in annual taxable wages, combined across grouped businesses, and the deduction phases out entirely at $10.4 million.
Stock in Xero
As a Xero Platinum Partner, we help set up stock, cost of goods and supplier records in Xero so year-end figures reconcile.
Family succession
For a family-owned manufacturer, a handover moves plant, stock and the entities holding them. We plan structuring, succession and valuations well before that day.
What does a manufacturing accountant do for an established manufacturing business?
We prepare financial statements, tax returns and BAS, and work through trading stock valuations at year-end. We also report on production costs, margins and cash flow, and handle the tax side of any R&D Tax Incentive claim.
Can my manufacturing business claim the R&D Tax Incentive?
Only a corporation can claim, and it must have at least $20,000 of notional deductions on eligible R&D activities. Sole traders, partnerships and trusts trading directly cannot claim. Under $20 million aggregated turnover, the offset can be refundable.
When do R&D activities need to be registered, and who are they registered with?
Registration is with the Department of Industry, Science and Resources, for every income year you want to claim, within 10 months of the end of the company’s income year and before the claim goes in the company tax return.
Can I write off a new machine in the same year I buy it?
With aggregated turnover under $10 million, an eligible asset under $20,000 is fully deductible in the year it is first used or installed ready for use. Dearer assets go into the simplified depreciation pool at 15%, then 30% a year.
Which methods can a manufacturer use to put a value on year-end stock?
The ATO accepts three bases: cost, market selling value and replacement value. The basis can differ between items and can change from one year to the next. Count close to the end of the income year, since any rise in value is taxed.
When does a Queensland manufacturer have to start paying payroll tax?
Payroll tax applies once annual Australian taxable wages pass the $1.3 million threshold. A deduction may be available, but it reduces by $1 for every $7 above the threshold and reaches zero at $10.4 million in wages.
Does a manufacturer based in Ipswich get Queensland's regional payroll tax discount?
On our reading of the Queensland Revenue Office list, no. The 1% regional discount covers areas such as Townsville, Cairns and Wide Bay, and Ipswich is not named. We can check how it applies to your own payroll.
Are there Queensland Government grants available for manufacturing businesses?
The Transforming Queensland Manufacturing Grants Program has offered matched grants of up to $1.5 million, and security may be required. Matched funding means you fund your share, so we can model the cash flow and forecast before you apply.
