The Personal Property Securities Register (PPSR) turns 7!

As of the 30^th of January 2019, the Personal Property Securities Register (PPSR) turned 7 years old. Whilst this may seem like an insignificant occasion, the movement of the PPSR into it’s 7^th year could potentially have implications for a large number of businesses.

7 years marks the maximum duration for a security interest which required registration by a serial number, or for other interests, a 7 year registration period represented the cheapest registration option (in terms of fees charged by the PPSR). So common is the 7 year duration that up to 115,000 registrations were automatically discharged on the day following the PPSR’s anniversary, 31 January 2019, that is 115,000 separate assets which small business and the people behind them lost protection for, and which could, in the wrong circumstances negate their ownership interests.

But what exactly is the PPSR again?

The PPSR is a national online register that stores the security interests of parties over assets. The purpose of the PPSR was to take lead from Canada and New Zealand to improve the ability of individuals and small to medium businesses to more effectively use their property to secure lending. To provide protection for consumers or businesses making large purchases, that are not real estate, e.g. motor vehicles, boats, trading stock, second hand goods and financial assets (shares).  Or when selling the above goods on credit terms or when leasing, renting and hiring out such goods.

Who uses the PPSR?

Most commonly the register is used by banks and other institutions which provide credit, as through this register they are able to secure their interests in the property which they facilitate the purchase of should their customer default.

Another common example is second hand car dealers. They will frequently review the register before purchasing a vehicle from a member of the public or from a fleet arrangement to ensure that no other parties (besides their seller) has a claim to the vehicle.

Doesn’t a clause in my contract protect me, and what is “Perfection?”

A retention of title clause is common in contracts where you are providing a good, the purpose of these clauses is to ensure that the title remains with you until the goods are paid for in full. However, these clauses no longer protect you on their own. With the PPSR in place, if another party has registered an interest in the same good (e.g. taken it as collateral for another loan) they will be ahead of you in the queue should your mutual customer default or go broke.

Perfection is a technical concept particular to the PPSR. Perfection over the security interest in an asset provides your interest in the asset with priority over other claimants. To have a perfected interest, it must have an attached security interest, be enforceable against third parties, and is either PPS registered or the collateral is in the possession or control of the secured party.

How can I check if my assets are still protected?

It is quick and easy to access the PPSR and have a “Registrations due to expire” report generated. Simply follow the link here, and follow the instructions provided. This process will require you to sign into the account you used to register your interest or to create a new account (this is free). Also note that all reports are generated as Excel files (.CSV and .XML) so for best compatibility download the report onto a laptop or desktop computer.

What should I do next?

Once you have a copy of the above report, review your interests and their expiry dates. It is key to renew your interests before they expire, as if they expire you must register a new interest, this will compromise your interest’s priority over the asset, putting it behind other parties. Further, if you have any other assets which you think may be applicable go about registering them onto the PPSR at the same time.

If you have any further questions or concerns regarding the PPSR please contact the team at GeersSullivan on (08) 9316 7000.

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ATO Assistance Available When Experiencing Financial Difficulties or Serious Hardship

The Australian Taxation Office (ATO) is very often seen as the bad guy who just collects taxes.  However, if you are experiencing financial difficulties or serious hardship the ATO does provide assistance to taxpayers through the following means:

• Extension of time to meet lodgment of tax returns, activity statements and other documents
• Providing more time to pay tax debts
• Tailored payment arrangements and in certain circumstances this might even include interest free periods
• Remission of general interest charges incurred on tax debts
• Release from payment of certain taxes and/or penalties incurred

Financial difficulties can range from cashflow issues, loss of employment, bankruptcy, business closure and legal action causing disruption to business.

The ATO defines serious hardship as when an individual is unable to provide the following for themselves and/or their family or other dependants:

• Food
• Accommodation
• Clothing
• Medical treatment
• Education
• Other basic necessities.

The factors that contribute to serious hardship include family tragedy, financial misfortune, serious illness, and natural disasters.

Depending on the amount of the tax debt and the assistance being requested, the application may be verbal over the phone or conducted through a formal application process.

The tax debts that the ATO can consider releasing a taxpayer from paying are:

• Income tax
• Pay As You Go (PAYG) Income Tax Instalments
• Fringe Benefit Tax (FBT) and FBT Instalments
• Medicare Levy and Medicare Levy Surcharge
• Penalties and interest charges associated with the above debts

However, the ATO can only release individuals, partnership and trust from paying the above debts.  A company can apply for the remission of penalties and interest charges but there is no release available from the taxes it owes.

One of the conditions that must be met when applying to the ATO for assistance is that all outstanding income tax returns and activity statements must lodged.

The ATO is also aware that financial difficulties and serious hardship can impact on mental health for individuals and their families so you will also find links on the ATO website to Health and Wellbeing Organisations that can help with support and information with mental health and wellbeing.

We work with our clients to sort out their cashflow issues and we can apply to the ATO on behalf of our clients to obtain the above measures to help clients through difficult times.  So, if you are experiencing cashflow issues, financial distress, or serious hardship please contact our office on (08) 9316 7000 for help.

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