Many subcontractors are missing out on the benefits of a key asset protection tool, a Queensland accountant warns.
The national Personal Property Securities Act came into being in January 2012, rendering redundant 70 Commonwealth, State and Territory statutes and culminating in the creation of an online register.
The register gives businesses and individuals an ability to manage the financial risks associated with extending credit or supplying goods by providing a facility to register their interest over personal property that’s in the possession of others.
But the register is not widely known or understood by subcontractors and small businesses, according to the principal of Toowoomba-based Synergy Accountants, Angie Gordon.
“Some clients are aware it exists, but many more don’t,” she said.
Ms Gordon advises business clients on asset protection, which includes lodging their ownership of equipment on the Personal Property Securities Register (PPSR).
“If there are legal questions we refer clients to solicitors who are skilled in the field,” she said.
Subcontractors Alliance board member Juanita Gibson said the register did not go far enough to protect the subcontractor, but was a start.
Ms Gibson said subcontractors now had a means of retrieving personal property and equipment locked in a construction site which had been placed in the hands of a receiver.
“The PPSR is useful in this situation, particularly when subcontractors rely on their equipment to make a living. In the past, I know subcontractors who lost everything,” she said.
“What is needed is a right of lien (security over property) or escrow (held in trust or as a security) over all of your property and works until it is fully paid for because at the moment it only covers equipment,” she said.
Registrar of the PPS system Gavin McCosker said the register, through a national online system, was delivering increased certainty; better access to credit; and digital enablement.
“The rules are applied consistently and predictably making it easier for borrowers and lenders to manage risk and make informed decisions about transactions,” he said.
“The register allows businesses and consumers to use a far wider range of collateral – basically all types of personal property – to gain access to credit.”
Mr McCosker said the register was allowing Australia to keep pace with an increasingly sophisticated sector that relied on real-time information sharing.
However Ms Gordon highlighted the need for an education campaign, saying “it’s gone under the radar” with a lot of people.
“It highlights the importance of businesses having a core group of advisors,” she said.
A significant element of the PPSR is a change of onus to prove you are entitled to take an asset which might be on a construction site.
Ms Gordon said people now had to prove ownership of that asset.
“Only last week I did a search on the register for a client who wanted to purchase a second-hand excavator to see if it had a clear title,” she said.
Businesspeople using the register can download a search including serial numbers and the process is used extensively by buyers of used cars.
Visit https://www.ppsr.gov.au/about-the-registrar for more information.