One of the most common company structures in Australia is where there is a trust and a trading entity. This separation of identities allowed for the trust to own all of the assets required by the trading entity to practise its trade. All accountants will still instruct their clients to set up their corporations this way. The issue is that things have changed.
The Personal Property Securities Register (PPSR) was introduced on the 30th of January 2012 and the implications for all businesses in Australia are immense. With the introduction of a registry for all security interests we are now beginning to realise the finer points of what this new legislation means. The effect on existing businesses should be investigated and assessed to ensure your compliance and protection.
There are many parts of the PPSR that will impose itself on all businesses but my focus in this notification is on the effects on trust structures. The fact of owning all of your assets within your trust no longer protects them from a receiver that might be liquidating your trading entity. The receiver has the ability to seize all or any equipment in the possession of the trading entity that does not have a “perfected” security interest registered on the PPSR. This could mean that any equipment, tools, materials or plant are at risk!
There are two choices available to the trust to ensure it retains ownership in all equipment. The first is to register each and every piece of equipment on the PPSR, the second is to contact EC Credit Control to investigate the possibility of their unique alternative and whether it will suit your business.
If you wish to find out more, please contact our head office on 1300 849 326.