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CAANF Meeting 1 Presentation 12 0-2011 [compatibility mo

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Automotive Accountant's Forum discussed new changes to FBT, ACCC and misleading advertising, cash management and more...

Automotive Accountant's Forum discussed new changes to FBT, ACCC and misleading advertising, cash management and more...

Published in: Automotive, Business, Technology

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  • 1. Automotive Accountants Network Forum Meeting 1 The Manningham 12th April 2011 Founding member of
  • 2. 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 angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  • 3. House Rules  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 angelosirianni@colledges.com.au Founding member of www.colledges.com.au
  • 4. 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) Founding member of
  • 5. Agenda Introduction - Whiteboard Items FBT Update ACCC – Care in Advertising Cash Management Whiteboard Items Founding member of
  • 6. Introduction Founding member of
  • 7. Whiteboard Items1. Vehicle preparation/yard staff measurement of cleaners to retail units2. Forum Members responses to Veda Auto Does presentation3. 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 commissions6. AMEX merchant fees follow up Founding member of
  • 8. 2011 FBT UpdateKey Changes for 2011BenchmarkingFBT ReviewKey FBT Rates Founding member of
  • 9. 2011 FBT Update  Key changes for 2011 - Continued Compliance Program for 20112010/11 Compliance Program StatisticsNo. Of Reviews (Audits/Desk Reviews) 27,845 • Businesses up to $250M annual turnoverRevenue Raised $659,000,000Average Audit Adjustment $25,000 Founding member of
  • 10. 2011 FBT Update Benchmarking - ATO creating benchmarks - Use with data matching - To identify possible employer audit targets Founding member of
  • 11. 2011 FBT Update Benchmarking - Current Industry Benchmarks already assessed • Building & Construction • Real Estate • Financial Services Founding member of
  • 12. 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: Founding member of
  • 13. 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). Founding member of
  • 14. 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 Founding member of
  • 15. FBT Update FBT Review What qualifies for FBT according to ATO? - This is on a case by case basis Founding member of
  • 16. 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. Founding member of
  • 17. 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. Founding member of
  • 18. 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 Founding member of
  • 19. 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. Founding member of
  • 20. 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 Founding member of
  • 21. 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. Founding member of
  • 22. 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. Founding member of
  • 23. 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 Founding member of
  • 24. 2011 FBT Update Key FBT Rates for 2011 FBT Year FBT Rate for 2011 FBT Year 46.5% Gross Up Rates • Type 1 2.0647 • Type 2 1.8692 Founding member of
  • 25. 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 Founding member of
  • 26. ACCC – Care in Advertising (Section 53 of Trade Practices Act 1974)AdvertisementInfringement Notices Founding member of
  • 27. ACCC – Care In Advertising Advertisement “Free extended lifetime mechanical warranty on new and used cars” (Lifetime Mechanical Warranty‘) Founding member of
  • 28. ACCC – Care In Advertising 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. Founding member of
  • 29. ACCC – Care In Advertising 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 Founding member of
  • 30. ACCC – Care In Advertising 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 Founding member of
  • 31. ACCC – Care In Advertising 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 Founding member of
  • 32. ACCC – Care In Advertising 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 Founding member of
  • 33. ACCC – Care In Advertising The dealer paid two infringement notices totalling $13,200 Founding member of
  • 34. ACCC – Care In Advertising Infringement Notices - The ACCC may issue an infringement notice where it has reasonable grounds to believe that a person has contravened certain consumer protection laws. Founding member of
  • 35. ACCC – Care In Advertising Infringement Notices - 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 Founding member of
  • 36. ACCC – Care In Advertising Infringement Notices - 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 Founding member of
  • 37. ACCC – Care In Advertising Infringement Notices - 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. Founding member of
  • 38. ACCC – Care In Advertising Infringement Notices - 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 notice penalty. However, if a person does not pay the penalty within the prescribed period, the ACCC may commence court-based action in respect of the conduct alleged to have contravened the Act. Founding member of
  • 39. ACCC – Care In Advertising Infringement Notices - 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 Founding member of
  • 40. Afternoon Tea Founding member of
  • 41. Cash Management How to tackle late payments How to avoid these issues Know your customer Founding member of
  • 42. 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 Founding member of
  • 43. Cash Management Obtain annual credit applications Review accounts - You are providing credit - Scrutinize the accounts with the above in mind Founding member of
  • 44. Cash ManagementHow to tackle late payment Haven’t received the invoice - Email with read receipt - Follow up - Email whilst on the phone Founding member of
  • 45. Cash ManagementHow to tackle late payment Purchase order number - Usually applicable for large businesses - Small businesses don’t use this process - Follow up Founding member of
  • 46. Cash ManagementHow to tackle late payment 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 Founding member of
  • 47. Cash ManagementHow to tackle late payment 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 Founding member of
  • 48. Cash ManagementHow to tackle late payment 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 Founding member of
  • 49. Cash ManagementHow to tackle late payment Rather pay in a lump sum - This is OK - Care should be taken with reconciliation - Ensure all invoices are paid Founding member of
  • 50. Cash ManagementHow to tackle late payment 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 Founding member of
  • 51. Cash ManagementHow to avoid these issues Strong administrative procedures Good invoicing process Tenacious debt collection – ongoing customer follow up Do not collect debts at end of month Issue invoices promptly Founding member of
  • 52. Cash ManagementHow to avoid these issues Verbal and written reminders within 60 days Use of debt collector Credit card payment Chasing accounts should be everyone’s responsibility Founding member of
  • 53. Cash ManagementKnow your customer Dun & Bradstreet survey Businesses on average take 52.1 days to pay their bills 90 day accounts up 7% (Dec 2010 quarter) Founding member of
  • 54. Cash ManagementKnow your customer Small firms at the mercy of larger firms Employees Days to settle debts 200+ 56.4 50-199 48.1 20-49 50 6-19 50 1-5 51.3 Founding member of
  • 55. Whiteboard Items Founding member of
  • 56. Whiteboard Items1. Vehicle preparation/yard staff measurement of cleaners to retail units Founding member of
  • 57. Whiteboard Items2. Forum Members responses to Veda Auto Does presentation3. Unions - Have any dealers been contacted recently? Founding member of
  • 58. Whiteboard Items4. Advertising - What is the most effective medium for your dealership? - Where do you currently spend most of your advertising budget? Founding member of
  • 59. Whiteboard Items5. After market commissions6. AMEX merchant fees follow up Founding member of
  • 60. Questions Founding member of
  • 61. Surveys Please Founding member of
  • 62. Thank-you Founding member of

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