The Brewer's Guide to a Better Bottom Line

Welcome, to the Podcast! Our newsletter made easy! Please note, this podcast features AI-generated voices for your hosts, Mia Taylor and Leo Baker, bringing you expert insights from owner, Ben De Rosa, at Aevum Accounting. Each week, we're here to help you confidently navigate the ins and outs of Australian tax – whether it's for your individual finances, or the complexities of your business. We'll cut through the jargon to give you strategies for compliance, smart planning, and that ultimate peace of mind. So, if you're looking to understand your obligations, maximize your financial position, or simply gain clarity on your money matters, you're in the right place. Let's get started with our review of the week! Jamie Hoggett from Vicjay plant hire says "We have been using Ben for over 6 years now for all of our Private and Business Accounting Services and we highly recommend anyone looking for Accounting with the upmost professional and solution based results" Thank you for the amazing feedback Jamie! We love hearing from our clients. and a positive review gets our podcast started on the right foot. And we are back! Leo Baker here, and Mia, I have been looking forward to this episode for weeks. Today, we are talking about a subject very near and dear to my heart. We are talking about craft beer! I thought that might get you excited, Leo. And I know you're not the only one in the team who's a massive fan. Our director, Ben De Rosa, is a huge lover of craft beer, especially "NEIPAs" and all things hazy. Ah, a man of excellent taste! Does he have a favourite? He certainly does. He’s said his all-time favourite is the Cake Eater from Banks Brewing. But you’re right, Leo, today we’re not just talking tasting notes; we’re talking about the business behind the beer. Craft brewing is a passion industry, but it's also a tough business. Today, we're going to talk about some of the amazing government incentives that can help these brilliant, creative businesses thrive. I am all for this. More financially successful breweries mean more great beer for everyone. It’s a win-win! So, where does a new brewery owner start when it comes to getting a bit of help from the taxman? A great starting point for brewers who are set up as sole traders or in a partnership is the Small Business Income Tax Offset. It’s a simple but effective benefit. An offset… remind our listeners what that is again. An offset is a direct discount on your final tax bill. A deduction reduces your taxable income, but an offset reduces the actual tax you have to pay. For small businesses, the offset is 16% of the tax payable on your business income, and it’s capped at a handy one thousand dollars per person, per year. So, it's a straight-up grand off your tax bill, just for being a small business owner trying to make a living. That’s a great start! But I feel like there’s something bigger on the menu today. You are right. Let’s talk about the main event, the absolute game-changer for innovative breweries. We’re talking about the Research and Development, or R&D, Tax Incentive. Okay, hold on. R&D? When I hear that, I think of guys in white lab coats in a sterile laboratory, not a brewer with a beard and a flannel shirt experimenting with hops. And that’s the biggest misconception we need to clear up! R&D in the eyes of the government isn't just about inventing time travel. It’s about conducting experiments where the outcome isn’t known in advance. And breweries do this all the time. Give me some examples. What kind of brewing magic counts as Research and Development? It could be experimenting with a new, wild yeast strain to see if you can create a unique and stable flavour profile. It could be developing a new process to brew a truly gluten-free hazy IPA that doesn’t taste like cardboard. It might be trialling a new canning technique that you hypothesise will reduce oxygen levels and improve the shelf life of your beer. The key is that you have to be trying to solve a technical problem or create something new, and you can’t know for sure if it’s going to work. If you’re just following a standard recipe, that’s not R&D. But if you’re experimenting to create a new recipe with a difficult ingredient, and you have to run multiple trials to get it right, that's R&D. This is blowing my mind. So all that trial and error, all those experimental batches, could actually be eligible for a tax incentive? So what do you get? This is the best part. For a small business with a turnover under 20 million dollars, the R&D incentive is a refundable tax offset. The rate is the company’s tax rate plus a whopping 18.5% premium. So for most small breweries paying 25% tax, that’s a 43.5% tax offset on their eligible R&D spending. Okay, a 43.5% offset is huge. But you said… *refundable*? What does that mean? It means that if your offset amount is greater than the tax you have to pay for the year, the ATO will pay you the difference, in cash. It’s a cash injection, rewarding you for your innovation. You’re kidding me. So you could get a cheque *from* the ATO for your experimental beer? This is the greatest thing I have ever heard. What costs can you claim? You can claim a lot of the direct costs of the experiment. This includes the salaries for your brewers for the time they spend on the R&D activities. It includes the cost of the raw materials you used in the trial batches – the malt, the hops, the fancy new yeast. It can even include the decline in value of equipment used for the R&D work. Wow. So what’s the catch? It can’t be that easy. The catch is paperwork. You need to keep excellent records to prove you were conducting eligible R&D activities. And you have to register your activities with Oz Industry each year before you can claim the offset in your company tax return. Okay, so it’s a bit of work, but for a potential cash-back from the ATO, it’s worth it. Absolutely. And while we’re talking about government help, there’s another huge one for breweries that's much simpler. It’s the producer rebate for excise tax. Ah, excise tax, the tax on alcohol that makes every brewer cry. Exactly. But under the current rules, eligible brewers can get a 100% rebate on the first $350,000 of excise duty they pay each financial year. For most small breweries, this is an enormous cash flow benefit that helps them compete with the big players. It’s a direct, straightforward rebate they can count on. So you’ve got the small business offset, the huge potential of the R&D incentive for innovation, and the excise rebate for your day-to-day operations. That’s a powerful toolkit. It is. But navigating these programs, especially the R&D incentive, requires expert guidance. You need to know what activities qualify, what records to keep, and how to lodge the claims correctly. And that is where Aevum Accounting comes in. We love working with craft breweries because they are such passionate businesses. We help them identify those eligible R&D activities, ensure their record-keeping is up to scratch, and we work alongside specialist R&D consultants to make sure their application is rock-solid. We want to ensure they get every dollar they're entitled to so they can keep innovating. So you help brewers spend less time on paperwork and more time brewing delicious beer. As a dedicated fan of the craft, Mia, I thank you for your service! And that brings us to the end of another episode! We hope today's discussion has provided you with valuable insights and helps you navigate your financial world with greater confidence. Before we go, a quick but important reminder: The information and strategies shared on this podcast are for general informational purposes only and do not constitute specific tax or financial advice. Everyone's situation is unique, and tax laws are complex and constantly evolving. For personalized advice tailored to your specific individual or business needs, we always recommend consulting with a qualified professional. You can connect with our team at Aevum Accounting – visit our website to learn more about our services, including detailed tax guides for various occupations, and how we can support your financial journey. Thank you so much for tuning in! If you enjoyed this episode, please consider subscribing, leaving us a review, and sharing it with anyone who might benefit. Your support helps us reach more Australians. Until next time, stay savvy, stay proactive, and keep building your financial future! From all of us at Aevum Accounting, goodbye for now!