CAANF Meeting 1 Presentation 12 0-2011 [compatibility mo

Automotive AccountantsNetwork Forum

Meeting 1

The Manningham 12th April 2011

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This presentation has been prepared by Colledge’s for the general information of its clients and forum attendees. While the information herein has been prepared with all reasonable care and derived from sources believed to be accurate, no responsibility or liability is accepted by Colledge’s or any of its affiliations, for any errors or omissions, including liability to any person of negligence or otherwise.

Recommendations may not be appropriate in all circumstances and clients must consider their own personal objectives and financial advice before acting on recommendations in this presentation.

Colledge’s (ABN 52 439 950 641)

For more information, contact Angelo Sirianni on 03 9851 6500 or email [email protected]

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Feel free to ask questions

Show respect for presenters and colleagues

One discussion at a time

Please switch phones to “silent”

Enjoy the forum!

For more information, contact Angelo Sirianni on 03 9851 6500 or email [email protected]

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House Rules

Quote for the day...

“It is no profit to have learned well, if you neglect to do well”

Publilius Syrus (~100 BC)(Writer of moral maxims (sayings)/Mime Actor)

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Agenda

Introduction

- Whiteboard Items

FBT Update

ACCC – Care in Advertising

Cash Management

Whiteboard Items

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Introduction

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Whiteboard Items

1. Vehicle preparation/yard staff measurement of cleaners to retail units

2. Forum Members responses to Veda Auto Does presentation

3. Unions

- Have any dealers been contacted recently?

4. Advertising

- What is the most effective medium for your dealership?

- Where do you currently spend most of your advertising budget?

5. After market commissions

6. AMEX merchant fees follow up

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2011 FBT Update

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Key Changes for 2011

Benchmarking

FBT Review

Key FBT Rates

2011 FBT Update

Key changes for 2011

- Continued Compliance Program for 2011

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2010/11 Compliance Program Statistics

No. Of Reviews (Audits/Desk Reviews)• Businesses up to $250M annual turnover

27,845

Revenue Raised $659,000,000

Average Audit Adjustment $25,000

2011 FBT Update

Benchmarking

- ATO creating benchmarks

- Use with data matching

- To identify possible employer audit targets

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2011 FBT Update

Benchmarking

- Current Industry Benchmarks already assessed

• Building & Construction

• Real Estate

• Financial Services

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FBT Update

FBT Review

Meal Entertainment

This is an area of much complexity and confusion

relates to meal entertainment and event-based

expenditure.

To put this group of activities into FBT categories,

the following groups require special consideration:

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FBT Update

FBT Review

(a) Food, drink and accommodation generally into the sub-categories of:

- meal entertainment, and

- not meal entertainment

(and thus deductible under the normal concepts of s 8.1 of the Tax Act).

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2011 FBT Update

FBT Review

(b) Recreation expenditure:

- expenditure on a social function, game of golf, movie ticket etc.

(c) Corporate sponsorships

(d) Seminar expenses

(e) Promotional expenses

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FBT Update

FBT Review

What qualifies for FBT according to ATO?

- This is on a case by case basis

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FBT Update

FBT Review

- On a case by case basis

- Influenced by answers to the following:

• Why – purpose test

• What – more elaborate

• When – during work hours or not

• Where – In-house vs restaurant etc.

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2011 FBT Update

FBT Review

Reportable Employer Super Contributions (RESC)

- The ATO have highlighted that this area was misinterpreted on the 2009/10 employee PAYG summaries, and that penalties are available to them.

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2011 FBT Update

FBT Review

- The purpose of this disclosure is to ‘add back’

this amount (normally extra contributions

above 9% SGC) to the PAYG salary for various

income-tested liabilities.

Note: it is not taxable income to the employees

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2011 FBT Update

FBT Review

Motor vehicles

- The following points are confirmed in respect to

pooled motor vehicle usage:

• MT2023 is an ATO ruling which has been

relied on by Accountants to adopt the

averaging provisions for determination of

the cost base and this ruling still applies.

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2011 FBT Update

FBT Review

- The FBT cost of pooled motor vehicles can be

further reduced by privately paid car expenses,

including:

• petrol

• parking fees

• car washes

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2011 FBT Update

FBT Review

- Usage days can only be reduced where the

employee does not have access to a vehicle.

Note: the fact that they are on leave, and the pool

car is in the garage at home, does NOT QUALIFY for a

reduction of usage days.

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2011 FBT Update

FBT Review

- Directors/Owners and associated persons are all liable for FBT on motor vehicle usage.

- The FBT charge on pooled vehicles is NOT a reportable fringe benefit. However if the vehicle is specifically allocated to an employee/owner that vehicle’s FBT cost is reportable.

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2011 FBT Update

FBT Review

- The ATO’s computerised approach, including

benchmarking, means that considerable care

needs to be exercised in the analysis of

transaction data

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2011 FBT Update

Key FBT Rates for 2011 FBT Year

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FBT Rate for 2011 FBT Year 46.5%

Gross Up Rates

• Type 1 2.0647

• Type 2 1.8692

2011 FBT Update

Key FBT Rates for 2011 FBT Year

- Type 1: where the employer is entitled to claim any input tax credit in respect to the acquisition of the benefit

- Type 2: benefits that are not Type 1.

→ i.e. benefits for which the provider is not entitled to claim any input tax credit

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ACCC – Care in Advertising(Section 53 of Trade Practices Act 1974)

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Advertisement

Infringement Notices

ACCC – Care In Advertising

Advertisement

“Free extended lifetime mechanical warranty on new and used cars”

('Lifetime Mechanical Warranty‘)

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Advertisement

- The fine print on the advertisement identified

(amongst other conditions) that the 'Lifetime

Mechanical Warranty' was limited to 175,000

kilometres and that claim limits applied. The claim

limit referred to is a total of $3,000 worth of claims

for the life of the contract the value of which was

not disclosed in the fine print.

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ACCC considered the conduct was in contravention of Section 53(g) of the Trade Practices Act 1974

- The advertisement states that the vehicle

would be supported with a lifetime warranty

- In fact, it was subject to limitations:

• kilometres travelled

• total value of claims limit


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ACCC imposed the following undertakings:

- The dealer will not:-

• make false or misleading representation

• engage in conduct that is misleading or deceptive

- Issue a letter to all effected customers and offer to switch to their Premium Warranty


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ACCC imposed the following undertakings:

- Issue notices in the daily newspapers and on their

website

- Implement a Trade Practices Compliance Program

within 3 months of the Undertaking


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The ACCC will do the following:

- Make the Undertaking public

- From time to time make public references to the

Undertaking in the media

- Will not denigrate the rights/remedies available to

any other person arising from the alleged conduct

- May hold in the Public Register a summary of the

ACCC Compliance Program Review reports


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The dealer paid two infringement notices totalling

$13,200



- The ACCC may issue an infringement notice where it has reasonable grounds to believe that a person has contravened certain consumer protection laws.

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- Infringement notices may be issued for alleged contraventions of various provisions of the Australian Consumer Law. These include:

• unconscionable conduct• certain unfair practices• pyramid selling• certain product safety and product

information provisions

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- The ACCC may also issue an infringement notice in relation to an allegation of:

• failure to respond to a substantiation notice

• provision of false or misleading information in response to a substantiation notice

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- The ACCC must issue an infringement notice within 12 months of the alleged contravention

- The penalty amount in an infringement notice will vary, depending on the alleged contravention, but in most cases is fixed at $6600 for a corporation (or $66 000 for a listed corporation) and $1320 for an individual for each alleged contravention.

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- The compliance period for payment of an infringement notice penalty is 28 days, but this may be extended for a further 28 days in certain circumstances.

- A person may choose not to pay an infringement noticepenalty. However, if a person does not pay the penaltywithin the prescribed period, the ACCC may commencecourt-based action in respect of the conduct alleged tohave contravened the Act.

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- Infringement notices may be issued for alleged contraventions of various provisions of the Australian Consumer Law. These include:

• unconscionable conduct• certain unfair practices• pyramid selling• certain product safety and product

information provisions

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Afternoon Tea

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Cash Management

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How to tackle late payments

How to avoid these issues

Know your customer

Cash Management

Business failures are easy to predict (retrospectively)

When dealing with your business clients - panel shops, repairers, wholesalers – there are some warning signs:

- Margin Erosion - Overtrading

- High Gearing - Inadequate Working Capital

- Unknown cash flows - Tax Obligations

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Cash Management

Obtain annual credit applications

Review accounts

- You are providing credit

- Scrutinize the accounts with the above in mind

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Cash Management

How to tackle late payment

Haven’t received the invoice

- Email with read receipt

- Follow up

- Email whilst on the phone

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Cash Management


Purchase order number

- Usually applicable for large businesses

- Small businesses don’t use this process

- Follow up

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Cash Management


Faulty part- Using the excuse to avoid payment- Should return part or collect it

Not yet due- Ensure your credit terms are clear- First delivery provide clear terms

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Cash Management


DP is away, can’t sign the cheque

- Constant follow up

- Call early or late, DP may answer

You have “messed up”

- Common customer complaint

- Phone orders should be reconfirmed

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Cash Management


Cash flow problem- Most honest reason- Any concessions first must be in writing- Due diligence- Credit card payment- Track customers progress through the accounts receivable system

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Cash Management


Rather pay in a lump sum

- This is OK

- Care should be taken with reconciliation

- Ensure all invoices are paid

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Cash Management


Horse trading- Scratch ‘our’ back- Buy customers product first- Proceed with caution

End of the queue- Some firms get preferential treatment- Enforce your payment terms

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Cash Management


Strong administrative procedures

Good invoicing process

Tenacious debt collection – ongoing customer follow up

Do not collect debts at end of month

Issue invoices promptly

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Cash Management


Verbal and written reminders within 60 days

Use of debt collector

Credit card payment

Chasing accounts should be everyone’s responsibility

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Cash Management

Know your customer

Dun & Bradstreet survey

Businesses on average take 52.1 days to pay their bills

90 day accounts up 7% (Dec 2010 quarter)

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Cash Management

Know your customer

Small firms at the mercy of larger firms

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Employees Days to settle debts

200+ 56.4

50-199 48.1

20-49 50

6-19 50

1-5 51.3

Whiteboard Items

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Whiteboard Items

1. Vehicle preparation/yard staff

measurement of cleaners to retail units

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Whiteboard Items

2. Forum Members responses to Veda Auto Does presentation

3. Unions

- Have any dealers been contacted recently?

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Whiteboard Items

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4. Advertising

- What is the most effective medium

for your dealership?

- Where do you currently spend most of

your advertising budget?

Whiteboard Items

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5. After market commissions

6. AMEX merchant fees follow up

Questions

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Surveys Please

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Thank-youFounding member of

CAANF Meeting 1 Presentation 12 0-2011 [compatibility mo

Automotive

Transcript of CAANF Meeting 1 Presentation 12 0-2011 [compatibility mo