The Federal Government is looking to remove the distinction between the term of a PPS lease for ‘serial numbered goods’ and ‘other goods’.
Currently, a lease is deemed to be a PPS lease:
- for serial numbered goods (eg motor vehicles, trailers, intellectual property, boats etc) if the term is 90 days or more;
- for other goods, if the term is 12 months or more, or for an indefinite term.
If passed, the Personal Property Securities Amendment (Deregulatory Measures) Bill 2014 will amend the section of the Act dealing with PPS Leases, so that a lease of personal property (regardless of whether it is for serial numbered goods or other goods) will be deemed a PPS lease if the term is:
- more than one year;
- an indefinite term;
- a term of up to one year, but which is renewable either automatically or at the option of one of the parties which may exceed a year; or
- a term of up to one year in circumstances where your customer will retain uninterrupted (or substantially uninterrupted) possession of the goods for more than one year.
Getting the term of the lease right, documenting the arrangement and registering security interest within time are critical if you want to secure your interests in personal property.