automotive accountants' network forum, 20 april 2010

Automotive Accountants’Network Forum

Meeting 1Tuesday 20 April 2010

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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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• Maximise outcomes for Dealership Accountants

• Professional & Personal Development

• Networking

• Keep up-to-date


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Why are we here?

• Ask questions

• Respect for presenters and colleagues

• One discussion at time

• Phones to “silent”

• Have fun!


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House Rules

1. National Consumer Credit Protection Act– Dealership exemption?

2. Improved Dealer Performance

3. FBT update

4. Division 7A

5. Son of Holdback – Latest news


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Agenda

a. Dealings Book (Police Book) Angelo

b. Stamp Duty – post disclosure feedback Angelo

c. Luxury Car Tax – Accessories sold Angelo

– Quoting ABN

d. Debtor Control – Any new ideas? Lorraine

e. I.T. – How being handled? Lorraine

Additional items?


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Whiteboard Items

In a time of drastic change, it is the learners who inherit the future.

Eric HofferAmerican Social Write & Philosopher

(25/7/1902 – 21/5/1983)


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Quote for the day

National ConsumerCredit Protection Act

Car Dealership Exemption?


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National Consumer Credit Protection Act

Where Dealerships (point-of-sale) currently stand

• Phase 1 of the Act is complete, having passed Australian Parliament and received Royal Assent.

• Within Phase 1, Car Dealerships are exempt (as point-of-sale) from having to:

Register with ASIC; and

Apply for a credit licence; or

Become a representative of a credit licensee.


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• “Phase 2” is now underway.

• Government will review various aspects of the regulations.

• On The Treasury’s agenda is consideration of the point-of-sale exemption.

• Colledge’s was informed by the Consumer Credit Unit in Canberra that the Motor Traders’ Association is on The Treasury’s review board.

Submission due June 2010.


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• Continues to be opposition to dealerships being exempt.

• In ASIC’s recent National Credit Roadshow, dealership exemption was discussed within point-of-sale.

Point-of-sale has such a “broad range of degrees of involvement of people”.

Government needs time to look at the various point-of-sale activities and how they should be regulated.


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Where Dealerships (point-of-sale) stand

But as at today, Dealerships, within point-of-sale, are

exempt from the Credit Act. This is ongoing until the

Government changes the Act.

Source: Consumer Credit Unit, The Treasury, Canberra


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Let’s be prepared:

ASIC Requirements


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ASIC Registration & Application requirements

Registration between 1 April to 30 June 2010

Applications for Australian Credit Licence (ACL) between 1 July to 31 December 2010

(Refer handout from Conference, 22/2/10)


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Registration


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ASIC Registration

• Those wanting to be involved in Credit Activities after 1 July 2010 need to be registered by 30 June 2010.

• Registration is free.

• Being registered, allows you to continue in Credit Activities.

• If you are not registered by ASIC by 30 June 2010, you must cease Credit Activities until registered.

These points exclude those that are exempt in the Act.


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ASIC Registration

Requirements

• Adhere to conduct requirements, such as being honest, fair and responsible lenders.

• Staff training and competency as an organisation.

• Become members of External Dispute Resolution (EDR) body.

Alternative to the courts (less formal)


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ASIC Registration

Responsible lending

1. Make “reasonable enquiries” about the customer’s objectives and requirements;

2. Take “reasonable steps” to ascertain the customer’s financial situation;

3. Assess the customer’s ability to repay the loan without “substantial hardship”; and

4. Do not offer or suggest products that are “unsuitable”.

Source: ASIC National Credit Roadshow (webinar)


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ASIC Registration

Disclosure requirements

Lenders will have to tell customers:

a) How much the broker receives for securing the loan;

b) All costs the consumer will have to pay to the broker, bank and others, and

c) How much money will be left over after these payments have been made.

That is, all customer fees and charges, and your commission for securing the loan.


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ASIC Registration

Registration application requirements

• Being a member of an ASIC approved EDR body.

• Up-to-date company details, e.g. Company Register

• Making statements regarding conduct of directors, company secretaries, partners, trustees

ASIC suggests background checks on people, including if:

- been insolvent or bankrupt

- had serious fraud convictions in past 10 years

- been disqualified from managing a corporation

- had credit registration or financial service licence cancelled


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ASIC Registration

• Not every person requires a licence

• A licensee can act through its employees, directors and related corporations

• One or more third parties can be authorised by a credit provider to act on its behalf = “Credit Representatives”.

The Credit Reps do not need to be individually registered

Licensee must authorise in writing their Credit Rep/s and what credit activities they will be involved in

Credit Reps must join an External Dispute Resolution body


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Application for Licence


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ASIC Licence Application

• Applications for Australian Credit Licence (ACL) start 1 July 2010

• Those who have not applied for ACL by 31 December 2010 must cease credit activities until they have a licence.

• By 30 June 2011, all applications will be processed.

• ACL numbers will be required on all marketing information, i.e. letterhead, website, etc.


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• Licence fees will depend on level of credit activity Range from $1,000 – $21,000

Non-refundable, including if application rejection

• ASIC will ask questions to assess suitability regarding becoming a licensee.

• Comply with the conduct obligations in the Act.


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• Provide details on the directors, secretaries, partners, trustees or senior managers

Need statements from each person that they are “fit and proper” to conduct credit activities under the licence.

• From this group, nominate people as “Responsible Manager/s” who have the expertise to be authorised under the licence.

• “Responsible Managers” have to provide their educational qualifications and experience to support the application.


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To comply with the conduct obligations in the Act, licensees will have:

• and maintain compliance arrangements and systems;

• trained and competent Reps, who are supervised;

• adequate HR, I.T., and financial resources;

• Risk Management systems in place;

• appropriate internal and external dispute resolution systems;

• Policy & Procedures to receive & assess variations in credit contracts;

• arrangements for compensation to customers (should you breach obligations under the Act).


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Due to the level of details within the Act, please note that this presentation is a summary of the requirements for ASIC Registration and Application for a Licence.

We encourage you to download and familiarise yourself with the documentation on ASIC’s website http://www.asic.gov.au/credit.

A great resource within the ASIC website is their Credit Roadshow webinar. We again encourage you to take 60 mins to watch the presentation which was a valuable source for this presentation.


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Improved DealerPerformance


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Improved Dealer Performance

Economic Recovery• Vehicle Market

AutoTeam 975,000 units March 1M+ units

• Cash rates forecast for 2010 has a further 0.5 – 0.75

• Employment improving

• Business sentiment best in 3 years

• Housing market booming

• Oil above $80bbl

• $A strengthening and nearing parity again

• Cautious optimismFor more information, contact Angelo Sirianni on 03 9851 6500 or email [email protected]

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What is driving the Recovery?

1. US economy

2. China at 9%+ growth

3. Economic stimulus around the world


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What are the risks?

1. Economic stimulus funded through public debt worldwide

2. Private debts – highest in history

3. European economic performance

4. China’s growth


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Key benchmarks


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Jan 2010 Apr 2009

NPBT % Revenue 2.5% 2.2%Gross % Revenue 15.5% 15%

Gross per Employee 11,000 10,000

Parts Service Absorption 57.5% 53%


Key benchmarks


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Jan 2010 Apr 2009

New Vehicle Gross $2,800 $2,700

New Vehicle Penetration Rate (Finance Insurance 32% 36%

Used Retail Gross $2,600 $2,400


Key benchmarks


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Jan 2010 Apr 2009

Labour Sales per Chargeable Employee $17,000 $13,500Parts Sales per Employee $75,000 $70,000

Expense as % Gross 70% 70%


Impact on Dealers – “Creep”

Improved trading conditions have lead to some old habits returning.

Watch out for:

1. Increased stock holding – days carry

2. Debtors creep

3. Floor plan creep

4. Head count creep

5. Expenses creep


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Lessons learnt during GFC should continue to be applied at dealership

1. Lean stock – being more selective

2. Keeping a tight control of cash

3. Balance Sheet account reconciliations

4. Managing floor plan expense – stock control

5. Staff productivity improvements

6. Control of spending


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Case Study

Recent Internet & Website expense analysis performed by Colledge’s.


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Dealership A

Actual cost for used car sale from internet lead• Inclusive of number of leads vs sales & subscriptions fees

$330/sale

Costs for website maintenance• Inclusive of hosting, content updates/changes

$990 (month)

Average website/internet spend for month $10,310

Average website/internet spend for year $123,720


1. Understand the impact of online advertising on dealership expenses and productivity.

2. Do you and your Dealer Principal look at internet and website invoices?

3. Do you have a process for dealing with internet sale leads?


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Internet & Websites

Being used effectively?


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Internet and Websites

• No longer good enough to have a static website

• Your website needs to be interactive and regularly updated

Dealership news

Automotive news

Car/model news

Newsletter / BLOG

• Content is king


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Social Media

• Twitter

• Facebook

• LinkedIn

• Blogger.com

• Slideshare


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Online Directory Listings

• Yellow Pages

• White Pages

• True Local

• Hotfrog

• Bigroo

Increase exposure, search engine optimisation and customer leads to your website with free internet sites.


Analysing your website

Google Analytics is free and will provide you with:

How many people visit your website

New vs returning visitors

The pages people are viewing

How long people are staying on your website

Where people are finding your details (Search engines, other websites, direct link)

Bounce rate – people clicking out immediately


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Internet & Websites

What is your Return on Investment?

• Beware of over-priced website contractors and set contracts(refer to Case Study in previous topic)

• What is your dealership’s internet spend?

• Who’s using Google Adwords?

What is ROI?


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Internet & WebsitesCost saving measures

• Ensure website contract provides a Content Management System (CMS) to add content yourself.

• Ensure you are not paying external contractors for email enquiries on your website.

Having a CMS will allow you to do this yourself.

• Decrease reliance on external search sites for used car sales.

• Analyse your website regularly.

Contact Colledge’s if you need assistance or advice.


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Fringe Benefits Tax


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Fringe Benefits Tax

FBT year 31 March 2010

Return due 28 May 2010


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Fringe Benefits Tax

Latest Update

• Major Change:

Salary Sacrifice Superannuation contributions now a reportable fringe benefit.

• No other changes


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Fringe Benefits Tax

FBT & Motor Vehicle Dealers

• Motors Vehicles

Pooled

Non Pooled

• Factory benefits


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Fringe Benefits Tax

• Meal entertainment

• Corporate boxes

• Recreational expenditure


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Fringe Benefits TaxReportable Employee Superannuation Contributions (RESCs)


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Have employer contributions been made for the employee during the year?

Do the contributions exceed the amount the employer is required to contribute under law

(e.g. SG Law) or some other obligation?

Did the employee have any influence over the amount of superannuation contributed for them?

The employee has RESCs for the year

Yes

Yes

Yes

The employee does nothave RESCs for the year

No

No

No

Fringe Benefits Tax

Salary Sacrifice

• FBT exempt otherwise deductible

Declaration required to support FBT

• 50/50 split declaration

• Expense declaration

• RESC advice to employees


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Fringe Benefits TaxRates & Thresholds

• Gross up rates Type 1 (taxable supplies) 2.0647 Type 2 (not “Type 1”) 1.8692

• Tax rate 46.5%

• Exemptions / Reductions Minor Benefits $ 300 (less than) Long Service Awards $10,000 Safety Awards $ 200 In-house benefits reduction $ 1,000 FBT reporting threshold $ 2,000 FBT benchmark interest rate 5.85%


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ATO

Division 7


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1. Use of Company Assets

2. Taxing Point for Companies


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Son of Holdback

Update


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Son of Holdback – Update

Current status

• Majority of eligible dealers have submitted “Stop the Clock” letters

• ATO has recognised “Stop the Clock” letters

• ATO has requested for magnitude of claim. Have not requested any substantiation

(amended BAS returns)

• ATO will hold claims in abeyance pending a court case to decide the validity of the claims


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Son of Holdback – Update

Current status

• ATO has begun issuing assessment notices resulting from the amended BAS returns

• ATO is rejecting claims

Tax payers have 60 days to object(A procedural issue)

• A Working Group has been established to effectively deal with the rejections


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Next Meeting:Tuesday 22 June 2010(at The Manningham)

Agenda to include: Service Dept KPIs


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automotive accountants' network forum, 20 april 2010

Automotive

angelo sirianni

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credit act

general information

credit licensee

sale exemption

various point

angelo quoting abnd