As of 1 October 2015, an important amendment to the Personal Property Securities Act 2009 (Cth) (PPSA) for serial numbered goods like motor vehicles, watercrafts and aircrafts came into effect.
What is the amendment?
Under the PPSA, serial numbered goods (e.g. certain types of intellectual property, motor vehicles and boats) are currently deemed to be security interests and require registration if they are leased or hired for a term of 90 days or more.
The amendment will narrow the definition of ‘PPS lease’ in section 13, meaning a lease of serial numbered goods will no longer be required to be registered when it is for less than 12 months.
This applies to all standard hire or lease agreements, but not to a lease that ‘in substance’ secures payment or performance of an obligation. It may also still apply to a lease for an indefinite term (i.e. a lease without a fixed end date that is continued past 12 months).
What is the effect of the change?
The single threshold will simplify the PPSA relating to PPS leases and reduce the complexity for businesses in determining whether a short-term lease should be registered.
The change will also bring the PPSA into alignment with regimes in other countries such as New Zealand and Canada. It does not affect leases entered into before 1 October 2015, and these transactions must still be properly registered to achieve protection under the PPSA.
What does your business need to do?
- You should ensure all short-term leases prior to 1 October are registered;
- You should amend your registration process to ensure that you are not unnecessarily registering short term leases post 1 October; and
- You should review your internal processes, training and documents to adequately reflect the amendments.
If you require further information about what the amendment means for your business, please contact:
Justin Hill
Principal
M: 0418 578 701
E: jhill@pageseager.com.au
