Click here for a full end of financial year checklist

WITH the run of public holidays finished, many dealers will now be focussed on their businesses’ performance in the final months of the financial year. While the dealerships operational results are key, it is just as important to focus on your year-end tax bill.

It won’t be long until June 30 comes and goes – but your financial results will live with you for the next 12 months. Whether it’s refinancing, selling or buying, your June 30 accounts will influence how people see your business.

According to Steven Bragg, director of Motor Industry Services at KPMG, “there are a few key items that have a significant impact on your tax and financial year-end, and getting them right can have a major impact on your reporting season”.

“First and most importantly don’t let the 13th month surprise you. Start planning now, ‘Spring clean’ your balance sheet in May to identify any areas of concern and to ensure the 13th month adjustments are not a surprise,” he said.

“Monthly reconciliations must be up to date and any issues that have been carried forward from month-to-month need to be dealt with by the May month end,” Mr Bragg said.

He also suggests a ‘review the floorplan’ schedule and an account reconciliation for debit balances.

“Don’t be fooled with overstated assets or understated liabilities in the balance sheet. They have a direct relationship to the profitability of the dealership,” Mr Bragg said.

“A good way to ensure the balance sheet accounts are reasonable is to compare them to the adjusted prior year-end balances for any indication of over or under statement.”

Other key actions recommended for dealerships to take in preparation for year-end include:

• Identifying non-deductibles and provisions that have a significant impact on taxable income.
• Performing tax estimate calculations for your dealership group and determining possible tax liabilities to know where you stand.
• If there are discretionary trusts involved, distribution determinations and resolutions need to be made prior to June 30 (or possibly earlier if required by the Trust Deed).
• Discuss a tax effective and commercial distribution strategy with a tax advisor well before year-end.
• Prepare a cash flow projection to ensure the owners and directors are able to meet their tax obligations.
• Ensure the accounts represent the best ‘view of you’ as a business at year-end. Double checking valuations, debt covenants and working capital positions prior to year-end will ensure your business looks its best for the next 12 months.

Click here for a full end of financial year checklist

By Daniel Cotterill