The land tax relief dovetails in with the National Cabinet Mandatory Code of Conduct for SME Commercial Leasing Principles during COVID-19. The centrepiece of those principles is a ban on the termination of commercial leases for non-payment of rent by SMEs. The land tax relief announced provides a mechanism whereby rentals can be reduced.
Below is a summary of the position for Queensland, New South Wales and Victoria:
Landowners in Queensland may be eligible for one or more of the following:
- Land Tax Rebate – Land tax liabilities for the 2019-2020 assessment year will be reduced by 25% for eligible properties.
- Waiver – Foreign entities will see the 2% land tax foreign surcharge waived for the 2019-2020 assessment years.
- Deferral – Land tax liabilities will be deferred for 3 months in relation to assessments raised for the 2020-2021 year (expected to be issued in July to September 2020)
The relief applies to both commercial and residential property. The landowner will be eligible if the ability of one or more tenants to pay their normal rent is affected by COVID-19. If one tenant meets the conditions then the entire property is eligible for the land tax rebate. The landlord must provide rent relief at least equal to the rebate. The Queensland relief package does not specify thresholds determining when COVID-19 has affected a tenant’s rent payment ability.
Landowners can qualify for the rebate if all or part of a property is available for lease but their capacity to secure tenants has been affected by COVID-19. In those cases, the rebate may be able to be applied to the landowners’ financial obligations.
The Queensland OSR website already has the online application process for landowners to claim the rebate.
New South Wales
Landowners in New South Wales may be entitled to a reduction of up to 25% of the land tax payable on a parcel of land in the 2020 land tax year. It’s available when:
- The property is leased to a residential tenant – or a business tenant with annual turnover of up to $50 million - who can demonstrate financial distress resulting from the COVID-19 outbreak, and
- The rent of the affected tenant is reduced by at least as much as the tax reduction
A three-month deferral will be available for outstanding 2020 land tax payments if the landowner has received a rebate or waiver.
Financial distress is considered to be:
- for commercial tenants - a 30 per cent drop in revenue due to COVID-19 pandemic
- for residential tenants - a 25 per cent drop in household income due to COVID-19
The online application is yet to appear on Revenue NSW’s website .
Landlords who provide tenants impacted by COVID-19 with rent relief may be eligible for a 25% reduction on the property’s 2020 land tax. This relief is also available to landowners who are unable to secure a tenant because of COVID-19. It applies for both residential and commercial properties,
Qualifying landlords can also defer the remainder of their 2020 land tax to 31 March 2021.
The relief package does not specify thresholds determining when a residential tenant has been affected by COVID-19. However, for commercial property landlords to be eligible, the property must be rented to a tenant with an annual turnover of up to $50 million, and the tenant must be eligible for the Commonwealth Government’s JobKeeper Payment.
The online application is yet to appear on Victorian SRO’s website . Victorian Parliament has fast tracked the legislation for debate on 23 April hence the application process may be online by the end of April.
In a previously announced measure, landowners due to pay 2020 land tax have the option of deferring their payment until 2021. The landowner must have at least one non-residential property and total taxable landholdings below $1million.
For each of the three states, a condition of the land tax relief is likely to be that the landowner is complying with the other aspects of the National Code of Conduct mentioned above.
For more information on the land tax relief in your state or for assistance applying for the relief please contact your usual Mazars advisor or alternatively:
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