As anticipated after the Parliamentary review of the
Personal Property Securities Act 2009
(PPSA) completed earlier this year, and with the
aim of reducing the number of lease transactions that fall within
the scope of the PPSA, the Australian Parliament has recently
passed legislation amending the PPSA with respect to what is a PPSA
This amendment is aimed to reduce the complexity, time and cost
for parties entering into hire or lease arrangements with
The amendment will mean that section 13(1)(e) of the PPSA will
be repealed, effective from 1 October 2015. It is important to note
that the amendments are not retrospective, so only apply to leases
or hire arrangements entered into on or after 1 October 2015.
Before 1 October 2015
Section 13(1)(e) of the PPSA provides that a lease of serial
numbered goods (for example motor vehicles) is a lease under the
PPSA if it is for a term of 90 days or more, whether that is made
up of a single set term, an initial term with options, or is the
period that the lessee actually retains possession of the
From 1 October 2015
Following 1 October 2015, a lease that is for less than one year
(including any option terms) and which is a lease of serial
numbered property to a commercial customer, will generally not be a
PPSA lease – making registration under the PPSA unnecessary
in order to protect an ownership interest. Any lessor should
however be able to provide proof of ownership, to avoid any risk of
It should be noted that a lease or hire arrangement for less
than one year could still give rise to a security interest and a
need for registration, if "in substance" it secures the
payment of money or the performance of obligations.
The remainder of section 13 of the PPSA will continue to apply
and certain lease transactions will continue to be PPSA leases or
give rise to a security interest. Registration of a lessors'
interest, either under another section 13 PPSA lease or any other
security interest created to secure the payment or performance of
an obligation, should be considered and if necessary made to
protect the lessor.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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