Protecting your Assets – Trusts are not the only protection you need

Many business owners are well aware that a trust or a traditional asset structure can be used to protect their assets. This is where the entity you trade is set up to be separate from the entity that owns your valuable assets. At Morrows, we deliberately recommend setting up this structure because if the trading entity ever failed, then at least your assets would still be safe in a separate entity. However, if you are not complaint with the PPS Act, then that asset structure is now largely worthless.

It is, however, straightforward to become compliant and restore your protection position.

1. A written lease must be created between your entities and then
2. Registered on the Personal Property Securities Register (PPS Register), probably for 25 years.

What is the PPS Register? What is the PPS Act? We’re glad you asked. Our advisors have prepared the following to help you understand the complexity around the PPS Act, asset protection and how to register on the PPS Register.

What is the PPS Register and PPS Act?

The PPS Register is a national online database that shows all registered security interests that businesses have in their personal property. Personal property includes vehicles, plant and machinery.

The PPS Act is the main piece of legislation that underpins the operation of the single national register, the PPS Register, for the registration of security interests in personal property. This legislation affects any business that hires, leases or rents goods without being paid first. So, if you’re a trade creditor, a financial institution or you hire equipment, it’s important to understand the impact that the PPS Act may have on your business.

Benefits of registering with PPS Register?

Registering your business with PPS Register provides the following protection and benefits;

1. Ability to collect or even receive payment of your assets that are still with your customer when the IP was appointed. You could even collect property previously paid for by the customer;
2. Ability to be paid from trade debtors;
3. Most likely, immunity from receiving an Unfair Preference; and
4. Increases the likelihood of being paid in full when a customer sells their business.

What is the cost of registration?

The cost of registration is just $6 for 7 years. That $6 investment provides protection for an unlimited number of transactions for an unlimited value. Cheap as chips!

How can Morrows help?

The PPS Act is quite complex, and registration can be a tricky process. Before you get started, we suggest you speak with your Morrows Tax and Business advisor.  Our advisors can assistance in determining your exposure and helping you understand the registration or renewal process.