What is the PPSR?

The PPSR consolidates existing Commonwealth, State and Territory registers into a single register, eliminating the need to search multiple registers, this includes charges registered by ASIC. It aims to improve access and service delivery to both financiers seeking to register an interest and to the public by allowing access to the PPSR.

What is covered by the PPSR?

The PPSR covers personal property and security interests (e.g. charges, mortgages and hire agreements). Personal property includes tangibles (e.g. art, motor vehicles, stock and equipment) and intangibles (e.g. intellectual property). Real property such land, buildings and fixtures are not covered by the PPSR.

If you are a supplier, seller or distributor of goods by sale or consignment or if you hire/lease motor vehicles and equipment the PPSR will substantially change your legal title over personal property.

What you need to do to prepare for the PPSR?

It is essential for businesses to:

• identify existing security interests and determine what needs to be registered;
  
• review terms of trade and contracts, particularly with respect to „retention of title‟ clauses;
  
• ensure customer details are accurate to complete effective registration; and
  
• update contracts and business practices to be compliant with PSSR.

Security interests currently registered on ASIC databases will be automatically transferred to the PPSR. Businesses have a 2 year grace period in which to transfer all other existing registrations to the PPSR.

Our qualified contacts can assist your business by:
- reviewing your terms of trade (or those of your clients or other parties you transact with);
- identifying your risks in running your business without PPSR registrations;
- showing you how to search and record interests on the PPSR;
- determining the information you should keep to assist with PPSR registrations; and
- preparing governance policies and procedures to prevent or remove unauthorised PPSR registrations against you or assets owned or controlled by you.

Please call our office directly to be put in touch with appropriately qualified professionals.

Amongst other things, the AAT held that the trustees made loans to a related party that amounted to effectively 100% of the fund's assets in contravention of s 62 of the SIS Act(the sole purpose test). Further, at least some of the loans were not made on an arms-length, commercial basis and were unsecured. Non-arm's length dealings with fund assets are prohibited by s 109(1) of the SIS Act which the AAT held was also contravened. Back to back loans were made by the related party to a member of the fund. This too contravened s 62.

The AAT also affirmed the Commissioner's decision not to issue a notice of compliance by exercising his power pursuant to s 42A(5)(b) of the SIS Act. In relation to the submission that the Commissioner should have exercised his discretion in the trustees' favour, the AAT said, at para 69, as follows:

"The Act plays an important role in the wider system of encouraging the community to provide for their own retirement and ease the strain on public welfare resources. In the present matter, the breaches of the standards required of superannuation funds to be concessionally taxed are particularly serious. The present circumstances are not those in which a discretion ought be exercised consistently with the principles governing exercise of discretionary powers. To do so would frustrate the wider objects of the Act by relieving those responsible for superannuation funds of tax imposts where all of the assets of a superannuation fund are managed in a contrary manner to various control measures under the Act. Exercising a discretion in these circumstances is not consistent with the objects of the Act."

The Trustee for the R Ali Superannuation Fund and FCT [2012] AATA 44 (AAT, O'Loughlin SM, 30 January 2012).

Answer:
Under the capital gains tax (CGT) provisions your main residence is exempt from GCT. Under the temporary absent rule if you move out of your main residence and you lease out your property; it can still be exempt from CGT for up to six years while you’re away. But if you buy another property in the meantime (as you did in Perth) and move into it, you need to make an election as to which one of the two properties is now your main residence. This is because you can’t own two main residences. If you elect the Perth property is your main residence, your Bentleigh main residence exemption ceases from the date your Perth property becomes your main residence. But if you elect your Bentleigh property to be your main residence, your Perth property is liable to CGT between the date you bought the property and the date you sell your Bentleigh property.

The ATO’s recently released Self-managed superannuation funds: A Statistical Overview report reveals that the percentage of all SMSF assets accounted for by 'real property' rose by just under 2% between 2008 and 2009 – bringing its total share of the SMSF market up to 14.7% ($48.3bn).

With the report also pointing to an increase in the number of young people deciding to set up SMSFs, Self-Managed Super Fund Professionals’ Association of Australia (SPAA) CEO Andrea Slattery believes that this younger demographic’s awareness of the real estate market may continue to boost the popularity of investing in property through SMSFs.
According to the ATO statistics, 11% of new SMSF members were under the age of 35 in the June 2010 quarter, compared to just over 5% for the whole SMSF member population.

“Those people that are younger are, as an example, looking for their own homes at the moment. And a lot of them are young professionals who are perhaps aware of the property market from a professional point of view,” said Slattery.
She added that property investment is increasingly being seen as something that’s “not only for the very few.”
“It’s a very exciting area, the whole issue of investing in an SMSF, but particularly the property issue is a very exciting area,” said Slattery.

She warned potential investors, however, to seek expert advice from qualified professionals before taking the plunge and investing in property through their SMSF.

Non-residential property takes a front seat

Interestingly, non-residential property outstripped residential when it came to their respective shares of all SMSF assets (11.1% vs. 3.6%). The dominance of non-residential property can be explained in part by the trend for business owners to hold their business premises within their superannuation fund.

“A lot of small business owners put their business property into an SMSF, and that’s part of their superannuation savings,” said Slattery.

A CRACKDOWN on federal government waste and unfair tax breaks is needed to help fund vital social and economic reforms without derailing the promised budget surplus, a new analysis says.

The Australian Council of Social Service has called for the abolition of some tax breaks for older Australians, which it says are based on age rather than ability to pay and discriminate against younger people. As well, it has called for reform of private trusts to stem their use for tax avoidance, a practice it says costs the budget $1 billion a year.

In its submission to the 2012 budget process released yesterday, the welfare lobby group says its proposed measures would help resolve the tension between the government's commitment to restore the budget to surplus from 2012-13 and the urgency of unmet social needs.

''The solution to the tension between resources and need is not to retreat from reform but to pursue it more comprehensively with a sustained attack on wasteful expenditure and tax breaks,'' says the acting chief executive of ACOSS, Tessa Boyd-Caine.

ACOSS says Australia is the eighth-lowest taxing country among the 30 developed nations in the Organisation for Economic Co-operation and Development. Australians were not overtaxed but taxed unfairly and inefficiently.

The main problem was an array of tax shelters and loopholes that enabled well-off people to avoid paying tax at the appropriate marginal rate.

ACOSS says individuals could reduce the marginal tax rates on their income by:

• Sheltering income in a private trust.
  
• Sacrificing salary for superannuation, which enabled taxpayers on the top marginal rate to reduce their tax rate from 46.5 per cent to 15 per cent.
• Taking advantage of the concessional treatment of ''golden handshakes'', which in many cases were taxed at 15 per cent.

In addition, small businesses could reduce their tax by taking advantage of capital gains tax concessions not available to other taxpayers, and international companies could shift profits from Australia to lower tax jurisdictions while maximising Australian debt levels.

ACOSS says the Senior Australians Tax Offset and the Mature Age Worker Tax Offset should be abolished. It urges the removal of the private health insurance rebate from ancillary health cover (in addition to the government's proposal to income test the rebate).
Dr Boyd-Caine says the measures would enable the government to give priority to those who were struggling.

ACOSS wants the $241 a week Newstart Allowance for singles and the $194 a week Youth Allowance for people living independently of parents increased by $50 a week. It says the real value of the allowances has not increased since the early 1990s.

It proposes a national oral health program in place of the Medicare Chronic Disease Dental Scheme and Teen Dental Program, which it says have not demonstrated effectiveness or arrested the growing gap in oral health between advantaged and disadvantaged Australians.

It urges the establishment of an ''affordable housing growth fund'' with a down-payment of $750 million in the first year to expand the stock of affordable housing.

The proposed measures would cost $3.6 billion in 2012-13, while the government would save an estimated $4.8 billion through the attack on ''unfair, inefficient tax waste and tax breaks''.

Genworth Financial chief executive Ellie Comerford told the AFR that despite poor growth in 2011, there was an uptick in the housing market toward the end of last year – largely as a result of lender discounting. However, she indicated lenders will likely switch gears in the coming months to stimulate the market.

“The question is, is Australia likely to chase returns by relaxing the [credit criteria] guidelines? And we don’t see that happening,” she said. “We see lenders who want to grow their businesses positioning with tailored product offerings.”

Comerford indicated lenders would be driven to develop products for borrower groups struggling with housing affordability.
She noted that self-employed borrowers were particularly hard hit last year by higher exchange rates and a patchwork economy.

A recent Genworth survey showed that 56% of respondents were forgoing spending on groceries to save up for a deposit on a property.

“In the 1970s the average age for a first-home buyer was 27 and now it is 31.8,” she said. “Home affordability has been a [growing] issue since the 1960s.”