AUSTRALIA Law and Practice Contributed by: Alastair Gourlay, Lewis Grimm, Joanne Dwyer and Kathryn Sutherland-Smith, Jones Day
4.4 Tax Incentives The public offer exemption from IWT, in par - ticular, makes Australia a potentially attractive location for private credit lenders, though it is important to ensure the relevant public offer test is satisfied. It would be prudent to supplement this protection with a tax gross-up clause. 4.5 Non-Bank Status For non-bank lenders, it is still possible to qual - ify for IWT relief under certain of Australia’s tax treaties, on the basis that the lender constitutes a financial institution (notwithstanding its non- bank status). Confirming this characterisation applies requires careful legal analysis by advi - sors with a thorough knowledge of Australia’s tax treaty network. The Personal Property Securities Act 2009 (Cth) (PPSA) governs the granting of security over “personal property”, with: a) a general security deed granting security over all assets; or b) a specific security deed granting security over particular assets, typically entered into by the grantors in favour of the secured parties. Notably, the PPSA does not cover interests in real property. Security over real property must comply with the relevant legislative requirements and follow the prescribed real property mortgage form of the jurisdiction in which the real property is located. 5. Guarantees and Security 5.1 Assets and Forms of Security Depending on the transaction, assets available as collateral to private credit lenders can include the following.
• Tangible moveable property security over tangible movable property that is “inventory” under the PPSA is considered a circulating security interest over fluctuating assets (ie, “circulating assets”). Perfection of a security interest over such property occurs via regis - tration of a financing statement on the PPSR with the timeframe being limited as compared to other collateral classes. • Financial instruments (ie, shares) security interests over shares can be perfected by control or registration, with perfection by con - trol being preferable. It is common practice in Australia for both registration of a financing statement on the PPSR and delivery of title documents (ie, share certificates and share transfer forms executed in blank) to take place. • Receivables security over claims and receiva - bles (ie, secured/unsecured loans, trade receivables, or contractual rights) are com - mon, with perfection occurring via registra - tion of a financing statement on the PPSR. Further, an assignment of receivables may, depending on the situation, be a deemed security interest and not require a separate security document for registration. • Real property most land is registered under the Torrens system, with each state and terri - tory operating its own Torrens system. Secu - rity over real property is granted pursuant to a registered real property mortgage, which needs to be registered on the Torrens system by recording the particulars in the relevant land titles register. Registration of a financing statement on the PPSR is the most common form of perfec - tion and is made where there are reasonable grounds to believe that the secured party is or will become a secured party over the collateral. Usually, registration must occur within 20 busi -
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