Asset Protection Structures (PPSA)

As detailed in the previous section (Securing Equipment Rentals), the PPSA has changed forever the idea of ‘ownership’.  It’s now all about ‘possession’ and now, if someone (even a related entity) in possession of your equipment becomes insolvent, you can lose your equipment.  Possession is now, more than ever, “9/10ths of the law”.

Remember, the PPSA is all about security; if you have security you better register it on the PPS Register if you ever want to use it on the insolvency of your customer.

But what’s the PPSA got to do with the equipment you hire or lease between related entities? You own the equipment and the various business entities are all of the one group, so what’s the issue?

Well, in some situations (almost certainly when equipment is hired ‘internally’), the PPSA deems you have a ‘security interest’ in your equipment, so, are you registering it?  And if not, what happens on the insolvency of a related party when they are in possession of your equipment?

assets ppsa

The use of these structures is widespread and for good reason, they are a very sound means of protecting your equipment from the insolvency of your business.  You hope it never happens, but you prepare for it, just in case.

The idea is to have Trading Co incur all the external trading liabilities of the business and in the event of insolvency, Asset Co can recover its equipment because it is the owner.  But, as we learnt in the last newsletter, it’s not about ownership, it’s all about possession.

The lease between Asset Co and Trading Co will almost certainly be a PPS Lease and accordingly, Asset Co should be complying with the PPSA.  If it’s not (which is usually the case), the equipment may well be retained by the insolvent Trading Co, completely undermining the whole purpose of creating this structure in the first place.

Once again, the answer is simple, comply with the PPSA.  The agreement between the parties must make it clear Asset Co is the owner of the equipment, Trading Co grants Asset Co security over the equipment and the security is to be registered on the PPS Register.

Because Asset Co has security over the equipment, it must register the security on the PPS register if it intends to rely on it.

Please, if you currently use such an asset protection structure, speak with your accountant or contact one of the PPSAdvisory team to determine the next steps.  Our Introductory Services will review your structure, lease agreement and advise on how to comply with your PPSA obligations.


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Be prepared for an uncertain economy

We’ve seen it many times before – when the economy nosedives, many businesses follow. Protect your business from the insolvency of others.

Long-term security

Trying to recover your debt and/or equipment after your client becomes insolvent is too late. Tighten your security to protect future payments and/or hired equipment.

Complicated paperwork done for you

Don't stumble at the final hurdle. We handle all the crucial paperwork to ensure you are correctly registered and your assets protected.

PPSAdvisory advises against several proposed revisions to the PPSA legislation due to potential increased costs, complexity, and uncertainty for businesses.


On Friday 17 November 2023, PPSAdvisory submitted a detailed response to the proposed amendments in the Personal Property Securities (PPS) framework. They challenge a number of the 345 proposed amendments made in the government’s response to the 2014 Whittaker report.


After almost 12 years of implementing the register, PPSAdvisory is concerned that these revisions will burden businesses with additional costs, complexity, and uncertainty instead of providing tangible benefits.


Users of the PPSA have adjusted their policies and registration practices to comply with the current legislation. Implementing such significant changes as proposed would require a complete overhaul of policies and practices. Additionally, these proposed amendments would render the policies and practices of many Australian businesses and financiers, particularly those involved in equipment hire, unworkable.


As result, the availability of finance for mining, construction, and heavy earthmoving equipment would be directly impacted. If financiers are unable to register their security interest in specific items of equipment (as only equipment with a Vehicle Identification Number can be registered by serial number), obtaining finance for such equipment will

become even more challenging.


We now await the response from Government to the submissions which have been made.


Feel free to reach out to us via the ‘contact us’ page on the website if you’d like any further information.