This document summarizes the proceedings of an automotive accountants networking forum meeting. It provides an agenda that includes introductions, updates on the FBT and ACCC, a discussion on cash management, and time for questions on whiteboard items. The FBT update section outlines key changes for 2011 including benchmarking, rates, and areas of focus like meal entertainment. The ACCC section reviews a case where a dealer was fined for misleading lifetime warranty advertising. Cash management tips are given for tackling late payments and knowing customers.

1. Automotive Accountants
Network Forum
Meeting 1
The Manningham
12th April 2011
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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
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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)
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5. Agenda
 Introduction
- Whiteboard Items
 FBT Update
 ACCC – Care in Advertising
 Cash Management
 Whiteboard Items
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6. Introduction
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7. 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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8. 2011 FBT Update
Key Changes for 2011
Benchmarking
FBT Review
Key FBT Rates
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9. 2011 FBT Update
 Key changes for 2011
- Continued Compliance Program for 2011
2010/11 Compliance Program Statistics
No. Of Reviews (Audits/Desk Reviews) 27,845
• Businesses up to $250M annual turnover
Revenue Raised $659,000,000
Average Audit Adjustment $25,000
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10. 2011 FBT Update
 Benchmarking
- ATO creating benchmarks
- Use with data matching
- To identify possible employer audit targets
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11. 2011 FBT Update
 Benchmarking
- Current Industry Benchmarks already assessed
• Building & Construction
• Real Estate
• Financial Services
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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:
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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).
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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
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15. FBT Update
 FBT Review
What qualifies for FBT according to ATO?
- This is on a case by case basis
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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.
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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.
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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
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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.
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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
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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.
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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.
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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
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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
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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
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26. ACCC – Care in Advertising
(Section 53 of Trade Practices Act 1974)
Advertisement
Infringement Notices
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27. ACCC – Care In Advertising
 Advertisement
“Free extended lifetime mechanical warranty on
new and used cars”
('Lifetime Mechanical Warranty‘)
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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.
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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
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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
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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
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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
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33. ACCC – Care In Advertising
 The dealer paid two infringement notices totalling
$13,200
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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.
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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
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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
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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.
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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.
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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
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40. Afternoon Tea
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41. Cash Management
 How to tackle late payments
 How to avoid these issues
 Know your customer
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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
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43. Cash Management
 Obtain annual credit applications
 Review accounts
- You are providing credit
- Scrutinize the accounts with the above in mind
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44. 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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45. Cash Management
How to tackle late payment
 Purchase order number
- Usually applicable for large businesses
- Small businesses don’t use this process
- Follow up
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46. Cash Management
How 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
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47. Cash Management
How 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
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48. Cash Management
How 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
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49. Cash Management
How to tackle late payment
 Rather pay in a lump sum
- This is OK
- Care should be taken with reconciliation
- Ensure all invoices are paid
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50. Cash Management
How 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
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51. Cash Management
How 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
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52. Cash Management
How 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
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53. 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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54. Cash Management
Know 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
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55. Whiteboard Items
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56. Whiteboard Items
1. Vehicle preparation/yard staff
measurement of cleaners to retail units
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57. Whiteboard Items
2. Forum Members responses to Veda
Auto Does presentation
3. Unions
- Have any dealers been contacted
recently?
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58. Whiteboard Items
4. Advertising
- What is the most effective medium
for your dealership?
- Where do you currently spend most of
your advertising budget?
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59. Whiteboard Items
5. After market commissions
6. AMEX merchant fees follow up
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60. Questions
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61. Surveys Please
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62. Thank-you
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