Personal Property Securities Register - a 'Potential Time Bomb'
Lack of knowledge of the Personal Property Securities Act (PPSA) and the Personal Property Securities Register (PPSR) could be a 'time bomb' for businesses. Millions of dollars has already been lost by businesses that paid for an asset but had not registered that asset on the PPSR. Whilst it's voluntary to register, if you have a transaction that you wish to register, you have to do so within a very tight registration time period. A business needs to be continually reviewing transactions with:
- service company arrangements;
- loans made;
- asset rental, lease or storage;
- intellectual property agreement; and
to determine whether those transactions need to be registered on the PPSR.
As one of the key criteria for making a decision on whether to register on the PPSR, businesses need to determine their level of 'financial tolerance' to a potential business problem. If a registration is not made, whilst there may be no immediate problem (indeed, there may never be a problem), there's a possibility that, sometime in the future, there could be an 'insolvency event' with a customer, borrower, hirer, lessee or property owner where one of your assets is stored. This really is a potential 'commercial time bomb'.
If you haven't already done so, we recommend you contact a commercial solicitor for advice on a 'Terms of Trade' agreement and 'Retention of Title' agreement that comply with the PPSA legislation. If you had these agreements prepared prior to January 2012, the agreements probably don't comply with the PPSA legislation. It's a good idea to have a due diligence review of your systems, to ensure you have the ability to make decisions within the very tight registration time frame.
Businesses that need to be especially diligent, relative to the PPSR requirements, include:
- Ingredient Suppliers
- Artists and Sculptors relative to paintings, works of art, sculptures, etc
- Trades and Contractors
- Farm Suppliers
- Wholesale Suppliers (suppliers of products to farms including seed, fertilisers and pest control)
- Livestock Owners
- Livestock Feed Suppliers
- Farmers with crops
- Thoroughbred Horses
- Portable Building Renters
- Construction Businesses
- Equipment Renters
When the GST was introduced, there was a major business education campaign, funded by the government. Unfortunately, there hasn't been a major campaign relating to the effects of the PPSA and the PPSR. Whist the GST couldn't send a business broke, ignorance of the PPSA and the PPSR could cause major financial problems for a business. If you would like us to conduct a review of your internal systems, relative to the identification of transactions or asset rentals, leases, etc, relative to the PPSR, please don't hesitate to contact our office.
Economic Conditions Still Challenging
The national growth rate is now over 3%, which many economists believe is 'back on track'. This means that there should be more money available for spending which, in the long term, will assist businesses.
There are some odd trends emerging:
- The employment rate, which for most of the global financial crisis period remained in the 5% band, is now approximately 6.2%.
- Housing approvals are up by approximately 6%. However, car sales have dropped by approximately 1%.
- Inflation is currently at 3%, which is the upper rate that was set by the Australian Reserve Bank in its targets for this year.
- Corporate profits are up by 3.2% (reflected in the profit rates).
- There are still concerns about business' confidence relating to the government's ability to undertake the budget repair work that is desperately needed.
- The mining industry investment boom is over, with mining activities now commencing in many new locations. However, the mining industry has been affected by the significant drop in iron ore prices over a short period of time.
- Interest rates are remaining at 2.5%. Whilst there is some speculation that the Australian Reserve Bank Board of Directors would like to increase the cash rate, the Board doesn't wish to increase the interest rate until the Board is relatively confident that an upward movement of the interest rates will not further strengthen the currency.
- Exchange rates have started to move, which is great news for exporters. However, importers will pay more for their products. The movement down of the exchange rate is expected to significantly benefit the tourism industry.
With growth over 3% and interest rates at 2.5%, some businesses will be able to see some light at the end of the tunnel. However, for many businesses, the challenges will continue in the next few months.
Developing Leadership 'People Skills'
The high cost of replacing staff is well known, as is the evidence that the majority of people leave their jobs, not because of the type of work they're required to do, but because of poor relationships with their managers. The managers might ensure the processes, procedures and systems are done right, but have little idea about the right approach to take in leading people. Skill and genuineness in dealing with people is the key to effective leadership. Whilst it's vital to gain the respect of your team, it's not necessary to try to be popular. The key points are:
- Involve team members in determining shared behaviours to be agreed and followed by all and endorse support and practice those which you agree.
- Attitude influences behaviour, so ensure your attitude and behaviours reflect those you wish others to adopt – be genuine and set the example.
- Everybody is different, so adjust your leadership style with individuals as they develop in confidence and commitment.
- Practice good leadership continually to foster the development of strong relationships and mutual trust.
Updated Superannuation Standard Choice Forms
The tax office have issued updated Superannuation Standard Choice Forms as a result of the introduction of SuperStream. The Tax Office suggest having all employees complete a new Choice Form so you can collect the information required to make contributions using SuperStream. Whilst this is not mandatory you should ensure that all new employees are issued with the updated Choice Forms.
Keep an eye out for more correspondence that we will be sending shortly in relation to SuperStream.