While we’re taking stock of the challenges and successes of 2022, there’s a number of things happening in the auto retail industry that are making dealers happy that they have accountants and other professional services to make sense of them. Canadian auto dealer spoke with MNP’s Chris Schaufele about a few things dealers should have on their radar as challenges and opportunities for 2023.
One of the most salient questions both dealers and associations have is about how to administrate the new federal luxury tax. In late August, one week before the new Federal Luxury Tax went into effect, MNP representatives joined Tim Reuss, President & CEO, CADA to discuss the new tax and what it would apply to and how it would be administered.
“We did two webinars with CADA, one earlier in the summer and one a couple days before implementation. It was very clear during the second webinar, that there are a lot of grey areas and unanswered questions still remaining. Unfortunately, a lot of that still remains today. Since the September 1 implementation date, there hasn’t been much commentary from CRA in terms of new updates or anything to that effect.”
Dealers have been left on the hook to try to read the mind of the CRA, but tax specialists across the country have been reaching out to the government for clarification. “What dealers are really wanting is something in writing that says, ‘this is what you include when you calculate the tax and here’s what’s not included’. We have over 600 dealer clients across the country that we work with. Not all of them are impacted by the luxury tax, but a good number of them are. So they’re reaching out to us for guidance on what to do. We give our educated opinion on what things look like. Hopefully sooner than later we’ll get some additional releases from CRA that will give us some clarity.”
Another thing that is on the mind of many dealers these days is succession planning. As the average age of a dealer-principal is well over 50, many dealers are reaching out to accounting and valuation companies to look at the options for what to do with the business when they retire.
“Succession is big on a lot of dealers’ minds, aside from the typical accounting and year end and tax,” said Schaufele. At MNP we have a significant suite of different services that we offer, and succession is one of them. As the population is ageing, and a lot of baby boomers are sitting in the Dealer Principal chair, they’re asking us, ‘what do I do with this store when it’s time to retire? Does it go to my kids, or do I consider selling to a consolidator?’
“A lot of them haven’t really sat down to think about the implications of each of the different scenarios that they could explore. What does it mean for their tax bill, and what does it mean for their kids and their family, and what does it mean for their legacy? What if their name is still on the store, and all of a sudden a big chain takes them up and they don’t like what’s happening at the store that still has their name on it?”
Cybersecurity is also on many dealer’s minds, and if it’s not, it definitely should be, said Schaufele. Because of this need, the MNP Digital department does a wide range of digital services for dealerships, including regular IT and automation.
“Cybersecurity is an important piece, making sure that dealers are protecting their assets and keeping their systems safe,” said Schaufele. Aside from the cybersecurity piece, the MNP Digital team manages services like IT and computer infrastructure. Another important thing for dealers to be efficient is the process automation field, and app development. Things that can automate processes for dealers, which is especially important in an age now where people are struggling to find employees.”
MNP is one of the largest full-service chartered professional accountancy and business advisory firms in Canada.