Starting and operating a car dealership in Australia is much more than finding the right cars and selling them to customers. One of the biggest challenges to operating a car dealership in Australia is understanding and complying with the various government legal requirements.
That brings us to the question, what are the legal requirements for starting a car dealership in Australia? EasyCars has put together the complete guide outlining the different legal requirements for starting and operating a car dealership in Australia.
Let’s get into it!
1. Obtaining the Necessary Licenses
The first and arguably the most important legal requirements for starting and operating a car dealership in Australia is gaining the necessary licences. The main licence that you need to trade in Australia is a Motor Dealer Licence. A Motor Dealer Licence is mandatory in all Australian states and territories.
It is important to note that each state in Australia has their own application process, many of which require criminal background checks, proof of financial stability, and completing training courses. Selling without a licence carries heavy penalties. one is illegal and carries heavy penalties.
2. Zoning and Planning Approval
Before you can set up your car dealership, you will need to ensure that your car dealership location complies with local zoning laws. To ensure that your dealership complies with these laws, you will need to seek approval from local councils and planning authorities. To help streamline the process you should ask the real estate from which you are planning to rent a commercial location from if the site is zoned to allow car dealership activities.
3. Complying with Consumer Protection Laws
Australian car dealerships are subject to some of the strictest consumer protection laws of any industry. The Australian government has gone above and beyond to introduce laws that ensure fair dealings between businesses and customers. These laws fall under the Australian Consumer Law (ACL) and are enforced by the Australian Competition and Consumer Commission (ACCC). Some of main points that all dealers need to know and understand include:
- Warranties and Guarantees: All vehicles that car dealerships sell must comply with the mandatory warranty consumer guarantees under the ACL. These guarantees give buyers certain rights, including the right to a refund, repair, or replacement if the car they buy from a dealership is faulty or does not perform as expected.
- Advertising and Marketing: All dealer car advertisements must be clear, honest, and not misleading. Any description or comment made about a vehicle’s price, condition, or features must be accurate and clear.
- Cooling-Off Periods: Depending on the Australian state or territory in which your car dealership is trading from, consumers may have the right to cancel a vehicle purchase within a specific cooling-off period (typically 1-3 days) after signing a contract.
It is so important that your dealership and it's staff understand the ins and outs of the consumer protection laws to avoid disputes with customers and potential fines.
4. Health and Safety Regulations
All Car dealerships in Australia must comply with workplace health and safety (WHS) regulations. The WHS laws in Australia for car dealerships are designed to keep customers and staff safe while operating. Failure to comply with Australia’s WHS laws can lead to penalties or legal action.
- Workplace Safety Plans: All Car Dealerships need to have comprehensive safety policies in place to manage risks such as moving cars etc.
- Safe Equipment and Training: Any tools, machinery, or equipment used in your dealership must be maintained to a high standard. On top of this all of your dealership’s staff must receive training on how to use the equipment safely.
- Fire Safety and Emergency Procedures: Your dealership must have fire extinguishers, emergency exits, and an evacuation plan in place. You dealership should also have the correct signs for fire emergency exists and conduct regular staff training.
5. Environmental Regulations
Environmental laws in Australia also impact car dealerships, that is particularly the case if your dealership has a service department or workshop add on. It is important that your dealership properly disposes of hazardous materials like oil and battery acids that prevents damage to the environment. To ensure full compliance, consult with environmental agencies or specialists on best practices.
6. Record-Keeping and Taxation Requirements
Another legal requirement that many car dealerships in Australia struggle with is record keeping and taxation. The Australian Taxation Office (ATO) requires all Australian car dealerships to have and maintain detailed financial records, including all sales invoices, purchase receipts and employee payroll information. On top of this your dealership will need to:
- Register for GST
- Pay Stamp Duty
- Meet Income Tax and Payroll Obligations
7. Insurance Coverage
Finally, all car dealerships in Australia will need to have the correct insurance coverage. Having insurance coverage at your car dealership will protect your business from a wide range of risks including liability claims, interruptions and most of all property damage. The most important types of insurance for car dealerships in Australia include:
- Public Liability Insurance
- Workers’ Compensation
- Business Interruption Insurance
Final Word,
To start and operate a car dealership in Australia is so important that you understand and adhere to all the different legal requirements. The 7 requirements presented in this piece are vital and need to be adhered to.
DISCLAIMER – The content within this blog does not constitute professional advice and is intended to be general in nature. Please consult with all relevant parties prior to making any decision.
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About EasyCars,
EasyCars by Jeal is an Australian, web-based, dealer management system that automates the buying and selling of motor vehicles. Using the latest technologies, EasyCars removes frustrations experienced at the dealership and opens your doors for greater growth.
EasyCars features include Simple Stock Management, Automated Advertising, Integrated Accounting, Government Compliance, Business Reporting, Facebook Automotive Inventory Ads, Reviews Management, Dealership Websites and more.
To learn more about EasyCars Dealer Management System or to arrange a no-obligation free demo, contact us today on 1300 473 744 or submit the form below.