EOFY for Manufacturers
5/5/25, 12:02 am
By Ark
In Australia’s manufacturing sector—where capital equipment cycles, inventory precision, workforce cost control, and regulatory compliance define operational viability—EOFY is not a tax event.
It is a structural recalibration point.
For manufacturers operating across food & beverage, engineered products, contract manufacturing, packaging, and industrial components, the decisions made now will determine cost-of-production accuracy, audit readiness, and bankability in FY26.
Here’s where disciplined manufacturing leaders are focusing with intent:
1. Capital Asset Realignment: Repositioning Plant and Equipment for Efficiency and Resilience
Context: A large portion of Australian manufacturers are still operating with plant assets financed pre-2022 under materially different interest rate and capex planning conditions. Ageing CNCs, inefficient lines, or service-intensive vehicles now present structural drag.
Director-level interventions:
Commission a return-on-asset analysis: map output-per-dollar-of-capex across key plant, fleet, and material handling equipment.
Decommission or replace sub-performing assets where depreciation or upkeep cost exceeds throughput value.
Restructure leases where current cashflow or interest coverage ratios no longer support historic terms.
Leverage EOFY investment allowances (e.g. $20,000 instant write-off) to bring forward efficiency-enabling upgrades.
Why it matters:.Asset-heavy operations demand precision. Misaligned capital structures distort margin truth, reduce adaptability, and create negative leverage during refinancing or equity events.
2. Labour Structuring: De-Risking Workforce Costs While Preserving Production Continuity
Context: Award compliance, casual conversion, overtime handling, and multi-site rostering complexities continue to expose manufacturers to wage risk. EOFY is the time to address classification, entitlements, and tax impact decisively.
What strategic leaders are doing:
Conduct a workforce structure review: validate classifications (FT, PT, casual, contractor) against Fair Work and ATO thresholds.
Reframe bonus and loadings structure to align with production windows, not calendar triggers
Top-up superannuation pre-30 June for skilled trade and supervisory staff as both a tax benefit and retention lever.
Ensure all casuals have compliant contracts with STP-ready structures, linked to actual hours patterns.
Why it matters: Labour exposure isn’t just about backpay risk. It affects capacity planning, retention, and funding covenants, especially when tied to EBITDA or headcount metrics.
3. WIP and Inventory Governance: Clarifying Working Capital, Eliminating Margin Fog
Context: Inaccurate WIP tracking, obsolete raw materials, and distorted finished goods valuation silently damage manufacturing P&L. For operators holding large production runs or multi-SKU inventory, EOFY cleanup is a balance sheet imperative.
Director-priority actions:
Execute a WIP age and status audit across all production orders open >60 days or over 10% budgeted COGS.
Write down or dispose of non-moving inventory, including slow raw inputs and unallocated batch-specific items.
Reconcile supplier credit balances, prepayments, and deposits to reduce unrecognised liabilities.
Re-align inventory valuation methods (FIFO/LIFO/standard) to match updated pricing volatility and audit readiness.
Why it matters: Without credible inventory and WIP visibility, no margin figure can be trusted. Clean books build confidence in funding, pricing, and procurement decisions.
4. Compliance Lockdown: Strengthening Audit-Readiness Before It’s Tested
Context:Manufacturing sits in a regulatory intersection: Workcover, STP, R&D incentives, FBT, asset reporting, environmental compliance. EOFY is when gaps get locked in—and when ATO and ASIC systems flag mismatch risk.
Best-in-class EOFY protocols include:
Pre-close audit of STP lodgements, payroll summaries, and superannuation accruals
Review of FBT exposure on pooled vehicles, equipment allowances, staff meals or site benefits.
Reconciliation of capital asset registers to tax depreciation schedules, especially across multi-factory setups.
Finalisation of trust resolutions (where applicable) with correctly journaled accounting entries
GST/PAYG variance check to align with actual cashflow movements and avoid system-flagged inconsistencies.
Why it matters: A minor reporting inconsistency in Q4 can result in withheld funding, audit requests, or governance penalties in Q1. High-precision financials are not a luxury, they’re a strategic asset.
Final Insight: EOFY as Strategic Infrastructure Maintenance
EOFY is a rare opportunity to dismantle inefficiencies, repair reporting structures, and realign financial systems with operational strategy.
“I don’t want a clean EOFY. I want an investable one.”— Managing Director, National Contract Manufacturer
▶ Ready to reset the structure?
Book a 1:1 Director Briefing: EOFY Planning for Manufacturers
A confidential working session focused on capital assets, labour structure, and working capital hygiene.