Both commercial and residential landlords alike would agree that land tax is one of the biggest imposts of owning property in Australia. For some landlords, land tax liabilities are difficult enough to meet at the best of times, let alone during the uncertainty of COVID-19.
Given that this is an evolving topic, we seek to break down the NSW Government’s response in terms of support and flexibility during COVID-19 as of today’s publishing date (20 April 2020).
Land Tax Relief Package
On 13 April 2020, the NSW Government announced that it will be releasing a $440 million land tax relief package1 which will be split equally for commercial and residential landlords respectively. Underlying this package are the principles outlined in the National Cabinet’s Code of Conduct, such as proportionality and good faith negotiation. You can read more about the code here.
In summary, both eligible commercial and residential landlords will be offered2:
- a land tax concession (by either a waiver or rebate) of up to 25% of 2020 land tax year if the landlord passes this saving as rent relief onto their tenants; and
- if the above land tax concession is claimed, a land tax deferral for any current outstanding amounts for a three month period.
The eligibility criteria for commercial landlords aligns with having business tenants that are also eligible for JobKeeper, that is having a turnover of less than $50 million and experience 30% or more reduction in revenue due to COVID-19. These types of business tenants are likely to include, but are not limited to, shops, cafes, gyms, hairdressers, restaurants, offices, warehouses and industrial sites.
Residential landlords will be eligible for the land tax relief if their tenant household can demonstrate that one or more rent-paying members of the household have had their income reduced by 25% or more as a result of COVID-193.
The NSW government is seeking to enact the above changes by legislation as soon as possible.
Further Land Tax Flexibility
In addition to the above, Revenue NSW has put in place measures that apply to all property owners required to pay land tax, regardless whether you are eligible for the land tax relief package concessions above. These measures will extend deadlines for land tax payments and demonstrate leniency for late payments. Further, land tax payers will also have the option to apply for instalment plans to lessen the immediate liability.
If you require further information about eligibility for land tax relief or any impacts on COVID-19 as a Landlord or Tenant, please do not hesitate to contact us.