What Will 2014 Bring?
Happy New Year and all the best for a successful 2014!
There is still a lot of uncertainty in business circles all around Australia, as to what is going to happen during 2014. Unfortunately, we will probably not know the key political decisions of the Abbott government, until the Federal Budget is delivered in May 2014.
At its February 2014 meeting, the Reserve Bank decided to keep interest rates at 2.5%, and the general expectations are that interest rates will not go any lower and will start to rise later in the year.
The Personal Property Securities Act (PPSA) has become fully operational from the 31st January 2014. Unfortunately, there were very little official promotions or education programs for SME businesses on how the Personal Property Securities Register (PPSR) will operate. This has already proved very costly for some businesses, which have lost out in court cases, mainly against liquidators and receivers. In this issue, we have included two articles on the PPSR. If you are uncertain of what impact could this new legislation make on your business, please contact your commercial solicitor or ourselves, so that a full review can be undertaken of your circumstances, and appropriate systems can be developed, to assist you in the decisions that will need to be made on whether to register a security interest on the PPSR.
It is interesting to evaluate economists' forecast on what might occur in 2014. Economic Forecast for 2014 calendar year focuses around the following:
• Real economic growth – 3.2%
• CPI growth and inflation – 2.9%
• Unemployment - 6-6.25%
• Federal budget deficit to be around $30B
• Reserve Bank of Australia Cash Rate – 2.5-3%
• Exchange rate – US$/AUS$ around 85c
As always, cashflow management will be very important. This includes the monitoring of debtors, stock, work in progress and abiding by bank governance on any loans or financing which have been negotiated with banks and other financial institutions.
Now is a great time to be preparing business plans and budgets for 2014. If you would like our assistance on any aspect of your business deliberation, please do not hesitate to contact us.
Exclusive Offer to Signum Business Advisers Clients
We are excited to let you know that we have negotiated a special discount for tickets to attend SHIFT2014, one of this year's best professional development events and a project of non-profit Rotary.
We have secured an allotment of tickets at just $100 (actual price is $325) to hear 15 dynamic Australian thought leaders each sharing 20 minutes of their best ideas and solutions for growth and profit. A pumping, powerhouse day of superb content - it's an event not to be missed. Final tickets won't last long so BOOK NOW. Use promo code SIG14 at the online checkout to secure the discount.
Here's a summary of what you'll take away and the impressive speaker line-up or refer to the flyer or visit www.shift2014.com.au.
So what's SHIFT2014 all about?
Thanks to technology, the world is moving at a faster pace than ever before. It is transforming the way we work and competition has never been as tough as it is right now. SHIFT2014 is about new thinking, new technologies and new opportunities. It is designed to provide to-the-point real take-home value minus the life stories and fluff – cold hard ideas and solutions you can use in your business right away around:
• achieving business success in the 'connection economy'
• 'shifting' your thinking to quickly meet commercial challenges head-on
• solutions and ideas for a competitive edge
• maximising results in a digitally driven 24/7 marketplace
• capitalising on consumer trends and expectations
• finding inspiration to become more innovative and adaptable to change
• how to future proof your organisation, your team and your career
When: Saturday 1 March
Time: Conference 9am to 5:30pm.
Where: Sydney Olympic Park Sports Centre
Time to Refinance your Home Loan?
Some lenders have recently reduced their fixed rate products by up to 0.4%, resulting in rates of 5.39% and 5.59% per cent being available for 4 and 5 year terms. As we are expecting rates to increase beyond the next 6-12 months as we are currently seeing interest from the banks to grow their business and some healthy competition, now may be the time to review your finances. Are you being treated as a valued long term and loyal customer or taken for granted?
If you would like your facility reviewed please contact our office for a free appraisal.
Government Grants and Assistance for SMEs
Research and Development – Registration is required by 30 April 2014. An extra tax rebate is available for a company that incurred more than $20,000 on Research and Development activities for the year ended 30 June 2013. If you wish to claim the rebate, you must register with AusIndustry prior to the 30 April 2014 or the date of lodgement of the company's income tax return, whichever is the earlier. If you are conducting ongoing Research and Development activities, you still have to register by the 30 April each year.
The Research and Development Tax Rebate for companies with turnovers under $20M is 45% of the eligible research and development expenditure which can include salaries of team members who have been legitimately engaged in research and development project activities. If the company is trading at a loss, you can be paid the Research and Development Tax Rebate as a cash amount within 30 days of lodgement of the company's income tax return.
If you would like assistance, relative to completing the Research and Development Application Form and lodgement with AusIndustry, please do not hesitate to contact us.
PPSR – Now Fully Operational
The Personal Property Securities Act (PPSA) became fully operational from the 31st January 2014.
The PPSA allows a 'security interest' in personal property to be registered and searched by anyone at any time. 'Personal property' applies to everything, except land and buildings. Whilst there is no compulsion to register any asset with the Personal Property Securities Register (PPSR), if you don't register assets to which the legislation has deemed a requirement, you could end up losing those assets (even though you paid for those assets) to someone else who has a superior claim to you, because they have registered in accordance with the PPSA. That business will then be lawfully able to sell the asset for which you have paid and utilise proceeds, as contribution towards payments to secured creditors.
Virtually every business will be affected by this legislation. If you have not seen your commercial solicitor for advice on your 'Terms of Trade' and the 'Retention of Title' clauses ('Romalpa Clauses') included within your tax invoices, there is a strong possibility that you are not complying with the PPSA legislation.
There have been major legal decisions, which have cost people, who thought they owned the assets but had not registered on the PPSR during the two-year transitional period. To their dismay, they have found that the law didn't recognise their ownership. In the case of WOW Sight & Sound, the business went into financial difficulties and many of the suppliers, who had supplied stock and consignment stock to WOW Sight & Sound stores, did not register their interest in the stock they supplied with the Personal Property Securities Register. The liquidator was able to register the stock items that were in the premises at the time of their appointment, thus the 'owners' of the stock did not have a priority. As a result, the suppliers lost a large amount of money.
In the QES case, QES placed plant and equipment on someone else's property, which went into liquidation. QES did not register their security interest on the PPSR, and the liquidator was able to claim that plant and equipment, and sell it for the benefit of the secured creditor.
In the Kentor Minerals case, a business supplied a tank worth $300,000 to Kentor Minerals, which then went into liquidation. The owner of the tank did not register their security interest on the PPSR, and they were unable to claim a priority on the tank. The liquidator was able to sell the tank for the benefit of the secured creditor.
This legislation is very important; if you have any questions as to how the legislation operations might affect your business, please do not hesitate to contact us.
Some of the Businesses Affected by PPSA
The Personal Property Securities Act (PPSA) will affect a wide range of businesses. Some of the key issues businesses which have transaction that could be registered on the PPSR include:
• retention of title clauses ('Romalpa Clause');
• Terms of Trade – both of these documents should be drafted by a commercial solicitor, who will ensure they comply with the PPSA;
• businesses operating in leased premises should seek legal advice on registering a security interest over plant, equipment, furniture, stock etc., that is situated on the leased premises; and
• another potential problem is preferential payments that may have been paid to your business. To protect yourself, you will need to seek legal advice on your Terms of Trade documents and the lodgement of a security interest on the PPSR.
Some of the businesses, which will be affected by the PPSA, include:
• restaurants, shops, offices, warehouses that are being leased from their owners;
• retail shop – retention of title clauses for credit sales;
• trades and sub-contractors – registration of security interests on tools, equipment, vehicle and machinery left on a third party workplace - gaining access to leased premises to retrieve tools, equipment, vehicles etc;
• risk of preferential payment claim by a liquidator, relative to leasing of furniture, fittings, equipment etc., that has been supplied to a third party e.g. a builder;
• wholesaler supplier – retention of title clause and registration of security interests for stock sold and not yet paid for and consignment stock;
• horses and other livestock that have been leased to a third party - registration of your security interest;
• farmers – crops – registration of a security interest in farm produce stored on someone else's premises; and
• equipment renters – registration of security interest.
In addition, other businesses will need to consider the PPSA legislation include:
• motor vehicle dealers;
• ingredient suppliers;
• water craft including boat owners;
• artists for paintings and other works of art;
• livestock on agistment;
• equipment such as harvesting equipment stored at someone else's property;
• share farmers;
• automotive spare parts suppliers;
• second hand motor vehicle dealers; and
• prawn brokers.
The type of transactions potentially effected by PPSA include:
• businesses buying assets – check the PPSR to see if there is any encumbrances on the asset you are proposing to purchase;
• service entity arrangements
• leasing goods – the legislation has introduced the term PPS Lease;
• leaving property at someone else's premises; and
• supplying goods on credit;
• dealing with your business' intellectual property.
• consignment stock;
The PPSA represents a very large change in commercial law, with some people claiming it is the biggest change in the last 200 years. If you have any concerns on your business transactions and how they might relate to the PPSA legislation, our recommendation is that you consult your commercial solicitor for advice on Retention of Title clauses and Terms and Conditions of Trade.