March 2009: Automotive Accountants' Forum

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Automotive Accountants' Network Forum held in March 2009 with topics including Managing the Global Financial Crisis, Australian Government Stimulus Package for Business, New (Fair work Australia) Awards.

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March 2009: Automotive Accountants' Forum

  1. 1. Automotive Accountants’ Network Forum For Accountants. By Accountants.
  2. 2. The GFC Is it about Global Finance Crisis or Geelong Football Club? You decide! 26 March 2009 Presenter: Angelo Sirianni, Colledge’s FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  3. 3. This presentation has been prepared by Colledge’s for the general information of its clients and seminar 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 ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  4. 4. “ It ain't as bad as you think. It will look better in the morning.” Colin Powell FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  5. 5. Australian Economic Outlook FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  6. 6. <ul><li>Australia cannot avoid the Global Financial Crisis! </li></ul><ul><li>Large Current Account Deficit </li></ul><ul><li>Financed largely through foreign banks </li></ul><ul><li>Australia’s banks do not have the sufficient Capital to replace this lending </li></ul>Australian Economic Outlook FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  7. 7. <ul><li>“ Terms of Trade” gains (due to commodity prices) </li></ul><ul><ul><li>Boosted Australia’s income by 2.0% pa </li></ul></ul><ul><ul><li>Sharp falls in prices have detracted significantly in Australia’s income </li></ul></ul><ul><ul><li> </li></ul></ul>Australian Economic Outlook FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  8. 8. <ul><ul><li>Deep recessions with Australian trading partners will affect Australia </li></ul></ul><ul><ul><li>Australian shares have fallen as much as overseas shares </li></ul></ul><ul><ul><li>Business confidence affected by the relentless tide of bleak news from overseas </li></ul></ul><ul><ul><li> </li></ul></ul>Australian Economic Outlook FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  9. 9. <ul><ul><li>Australian outlook not as bleak as in 1990-91 </li></ul></ul><ul><ul><li>Most of the factors impacting overseas economies are not present to the same degree here: </li></ul></ul><ul><ul><ul><ul><li>Australia’s banking system still in good shape </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Australia’s house prices have not fallen significantly (except at the top end) </li></ul></ul></ul></ul><ul><ul><li>Fall of $A is of assistance </li></ul></ul><ul><ul><ul><ul><li>Cushioning impact of sharp falls </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Reducing risk of inflation </li></ul></ul></ul></ul>Australian Economic Outlook FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  10. 10. <ul><ul><li>Monetary policy is working more effectively </li></ul></ul><ul><ul><li>Fiscal policy is being activated earlier than in previous recessions </li></ul></ul><ul><ul><ul><ul><li>Australia’s measure has been better designed than in other countries </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Source: Saul Eslake, ANZ, 27 February 2009 </li></ul></ul></ul></ul>Australian Economic Outlook FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  11. 11. <ul><ul><ul><ul><li>Source: ANZ Economic Outlook, March Qtr 2009 </li></ul></ul></ul></ul>Australian Economic Outlook FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM Numbers 2007 2008 (F) 2009 (F) GDP Wages Employment Unemployment Inflation 4.0 4.1 2.8 4.2 2.3 2.3 4.2 2.3 4.2 4.4 0.1 3.6 0.1 5.4 2.9
  12. 12. <ul><ul><ul><ul><li>Source: ANZ Economic Outlook, March Qtr 2009 </li></ul></ul></ul></ul>Australian Economic Outlook FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM Current Jun 09F Sept 09F Dec 09F Interest Rate RBA Cash Rate 90 Day Bill Rate 3.25 3.01 2.75 2.93 2.25 2.10 2.00 2.30
  13. 13. <ul><ul><ul><ul><li>Source: ANZ Economic Outlook, March Qtr 2009 </li></ul></ul></ul></ul>Australian Economic Outlook FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM GDP 2007 2008 (F) 2009 (F) US China G7 2.0 11.8 2.2 1.4 9.1 0.9 -1.6 6.9 -1.5
  14. 14. Managing the Global Financial Crisis FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  15. 15. <ul><li>Bullet proofing </li></ul><ul><li>Cash-flow </li></ul><ul><li>- Accounts receivable process - Daily bank reconciliations - Discipline - Target cash-flow </li></ul><ul><li>Finance </li></ul><ul><li>- Cash balance expenses between 2-6 months - Review finance facilities - Establish new ones - Keep your financier informed - Payouts - prompt </li></ul>Managing the Global Financial Crisis FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  16. 16. <ul><li>Costs / Expenses - Track key numbers - KPI analysis e.g. Sales per staff numbers RIs per advisor, etc... - Scale down as appropriate - Create cost control culture - Involve staff </li></ul><ul><li>Sales - Monitor sales regularly - Re-adjust to the new market - Manage your customer database - Keep marketing (cost effective methods) </li></ul>Managing the Global Financial Crisis FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  17. 17. <ul><li>Inventory - Maximise stock turn </li></ul><ul><li>- Stock to your market </li></ul><ul><li>- Watch old stock </li></ul><ul><li>- Keep inventory to the correct level (increasing floorplan will come at a cost) </li></ul><ul><li>- Keep retail finance up helps with floorplan availability </li></ul>Managing the Global Financial Crisis FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  18. 18. <ul><li>Staff - Use KPIs to manage staff </li></ul><ul><li>- New job descriptions </li></ul><ul><li>- Natural attrition </li></ul><ul><li>- Share roles where possible </li></ul><ul><li>- Train so you can maximise results when things improve </li></ul><ul><li>- Keep morale up </li></ul><ul><li>- Keep an eye on fraud opportunities </li></ul><ul><li>- Manage up and out as applicable </li></ul>Managing the Global Financial Crisis FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  19. 19. <ul><li>Planning - Prepare a master plan </li></ul><ul><li>- Develop action plans and strategies </li></ul><ul><li>- Involve staff </li></ul><ul><li>- Measure everything </li></ul><ul><li>- Quarterly forecasts </li></ul><ul><li>- Assign responsibilities and accountabilities </li></ul><ul><li>- Regular updates and meetings </li></ul><ul><li>- Keep things on track </li></ul>Managing the Global Financial Crisis FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  20. 20. <ul><li>Other - Are you “glass half full or glass half empty”? </li></ul><ul><li>- Positive spin e.g. 95% employment Interest rates lowest in 8 years Oil at $50/barrel Petrol 60c/l less </li></ul><ul><li>- Positives about your business: The silver lining </li></ul><ul><li>- Some segments are still improving </li></ul>Managing the Global Financial Crisis FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  21. 21. <ul><li>Expect changes </li></ul><ul><li>Current economic downturn </li></ul><ul><li>Significant economic restructuring occurring </li></ul><ul><li>Uncertainty </li></ul><ul><li>Increased Government ownership </li></ul><ul><li>Different economy on the other side </li></ul><ul><li>Future regulation / oversight will increase </li></ul><ul><li>Less leverage / more Government </li></ul><ul><li>Cash and securitisation increasingly important </li></ul><ul><li>Be wary, but be prepared </li></ul><ul><li>Opportunities will present themselves again </li></ul>Managing the Global Financial Crisis FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  22. 22. Stimulus Package – Business FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  23. 23. <ul><li>Stimulus Package – Business </li></ul><ul><li>Draft Legislation – public consultation </li></ul><ul><li>Investment Allowance – Tax Break </li></ul><ul><li>Applicable to new assets </li></ul><ul><ul><li>Purchased and ready for use in Australia </li></ul></ul><ul><ul><li>Tangible </li></ul></ul><ul><ul><li>Depreciating assets with depreciation deduction under Division 40 ITAA </li></ul></ul>Stimulus Package – Business FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  24. 24. Stimulus Package – Business FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM Contracts entered by 30 June 2009 31 Dec 2009 Assets installed by 30 June 2009 30 June 2010 31 December 2010 30% in 2008-9 30% in 2009-10 10% in 2010-11 10% in 2009-10 10% in 2010-11
  25. 25. <ul><li>Small business over $1,000 per individual asset </li></ul><ul><li>Other business over $10,000 per individual asset </li></ul><ul><li>Not applicable to second-hand assets </li></ul><ul><li>Cars qualify if they are new and eligible for a tax deduction under Division 40 </li></ul>Stimulus Package – Business FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  26. 26. <ul><li>Demo can be new or second-hand </li></ul><ul><ul><li>A demo can qualify for “new” assets provided they have only been used for reasonable testing and trialling (in the hands of the purchaser) </li></ul></ul>Stimulus Package – Business FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  27. 27. <ul><li>Eligible for Tax Break (cars) </li></ul><ul><li>Taxpayers using one third of actual expenses and log book method </li></ul><ul><ul><li>Claim a deduction under Section 40 </li></ul></ul><ul><li>Taxpayers claiming “12% of original value” method can claim a depreciation deduction (they will not be excluded) </li></ul><ul><li>Taxpayers claiming “cents per kilometre” cannot claim tax break </li></ul><ul><li>Car limit applies </li></ul>Stimulus Package – Business FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  28. 28. <ul><li>Land and buildings are not eligible </li></ul><ul><li>Definition of </li></ul><ul><ul><li>Small business – Less than $2M </li></ul></ul><ul><ul><li>All others – Greater than $2M </li></ul></ul>Stimulus Package – Business FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  29. 29. If the asset is subsequently sold, the tax break is still available, provided it was installed and ready for use by the deadline. Stimulus Package – Business FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  30. 30. Son of Holdback FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  31. 31. <ul><li>Deloitte has initiated action with the ATO </li></ul><ul><li>Recover GST paid on factory incentives made by franchisors to dealers </li></ul><ul><li>Claim they are not a supply – basis is the KAP Motors Case </li></ul>Son of Holdback FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  32. 32. <ul><li>Factory incentives include: </li></ul><ul><li>Fleet claims </li></ul><ul><li>FBT reimbursements </li></ul><ul><li>Annual, quarterly, monthly bonus payment </li></ul><ul><li>Demo bonuses </li></ul><ul><li>Subsidies </li></ul><ul><li>Target incentives </li></ul><ul><li>Parts obsolescence payments </li></ul><ul><li>Advertising reimbursement </li></ul><ul><li>Run out bonuses </li></ul><ul><li>Excludes warranty payments and holdback payments </li></ul>Son of Holdback FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  33. 33. <ul><li>Issues : </li></ul><ul><li>Needs a court case to define (Federal Court) </li></ul><ul><li>ATO will rigorously defend </li></ul><ul><li>Not sure of franchisors’ position on the matter </li></ul><ul><li>Unsure of any protection available to the franchisors </li></ul><ul><li>ATO may seek reimbursement from the franchisors </li></ul>Son of Holdback FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  34. 34. <ul><li>Some actions : </li></ul><ul><li>Stop the clock letters – intention to claim </li></ul><ul><li>Quantify the claim </li></ul><ul><li>Deadline is 13 March 2009 – not sure of relevance </li></ul><ul><li>Unsure of the enduring quality of “Stop the Clock” </li></ul><ul><li>May take some time for court action to be resolved </li></ul>Son of Holdback FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  35. 35. New Award Requirements Source: VACC FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  36. 36. <ul><li>Background </li></ul><ul><li>The Australian Fair Pay & Conditions Standard (AFPCS) introduced as part of Work Choices amendments. </li></ul><ul><li>Came into effect 27 March 2006 </li></ul><ul><li>Maximum hours of work guarantee provides that employees cannot be asked to more than 38 hours per week, although reasonable additional hours may be agreed upon </li></ul>New Award Requirements FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  37. 37. <ul><li>Background (cont) </li></ul><ul><li>With the wages guarantee, an employee must be paid a minimum rate of pay for each hour of work, including any reasonable additional hours </li></ul><ul><li>Each hour worked in excess of the 38 ordinary hours is to be paid on an hourly basis </li></ul>New Award Requirements FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  38. 38. <ul><li>Vehicle Salespersons </li></ul><ul><li>The Federal Vehicle Industry Repair, Services & Retail Award 2002 (the Award) has special provisions </li></ul><ul><li>Salesperson agrees to work either 5½ day week or 11 day fortnight </li></ul><ul><li>The special provisions do not restrict or limit the maximum ordinary hours during these rostered work periods </li></ul>New Award Requirements FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  39. 39. <ul><li>Vehicle Salespersons (cont) </li></ul><ul><li>Vehicle salespersons are excluded from the provisions in the Award relating to ‘ordinary hours of work’, ‘overtime’ and penalty rates </li></ul><ul><li>Three year exemption from the maximum hours of work guarantee </li></ul><ul><li>Currently applies to vehicle salespersons, however the exemption will cease on 27 March 2009 </li></ul>New Award Requirements FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  40. 40. <ul><li>Vehicle Salespersons (cont) </li></ul><ul><li>If you take no action, as of 27 March 2009 you will be required to pay your vehicle salespersons for every additional hour worked in excess of 38 hours. </li></ul><ul><li>This will ensure you comply with the AFPCS under the Act. </li></ul>New Award Requirements FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  41. 41. <ul><li>What are my current options? </li></ul><ul><li>VACC suggests four options: </li></ul><ul><li>No change to working hours or commission agreement: </li></ul><ul><li>Pay vehicle salespersons for hours worked over 38 hours </li></ul><ul><li>Reduce working hours to 38 hours per week with no change to commission agreement: </li></ul><ul><li>That is, you do not have to make payments for hours worked in excess of 38 hours, however a salesperson will have fewer hours in which to make sales and earn commission </li></ul>New Award Requirements FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  42. 42. <ul><li>What are my current options? (cont) </li></ul><ul><li>Vary the contract of employment with the salesperson (by agreement in writing): </li></ul><ul><li>Agreement would be amended to provide that commission earned is to be attributed to any payments owed under the AFPCS for hours worked in excess of 38 hours </li></ul>New Award Requirements FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM
  43. 43. <ul><li>What are my current options? (cont) </li></ul><ul><li>Vary the commission agreement with the salesperson (by one week’s notice under the Award): </li></ul><ul><li>N eed to calculate the number of hours worked by the salesperson and determine what level the commission should be set in order to maintain current remuneration. </li></ul>New Award Requirements FOR ACCOUNTANTS, BY ACCOUNTANTS COLLEDGE’S AUTOMOTIVE ACCOUNTANTS NETWORK FORUM

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