COVID-19 Land Tax Relief

Various relief measures and initiatives have been introduced by the Government over the last 6 months in response to the COVID-19 pandemic. One of these initiatives has been to introduce land tax relief by way of deductions, deferrals and in some cases waivers for land owners across Australia, and provide rent relief for commercial and residential tenants.

TYPES OF RELIEF

The types of land tax relief being offered vary across the country but include;

  • Reductions and deferrals for land tax subject to commercial and residential leases.
  • A full waiver of 2021 vacant residential land tax liabilities
  • Land owners due to pay 2020 land tax that own at least one non-residential property and total taxable landholdings are below $1million – are not required to pay their 2020 land tax assessment until 31 March 2021.

SUMMARY

Now all States and Territories are providing some sort of relief to commercial and/or residential landlords impacted by COVID-19.

  • Victoria offers a land tax payment reduction and deferral;
  • South Australia offers a land tax payment reduction and deferral. Also, the Land Tax Transition Fund relief will be increased from 50% to 100% for the 2020-21 land tax assessment;
  • Tasmania offers a land tax waiver for commercial property for the 2020-21 financial year, subject to certain conditions;
  • Western Australia offers an interest-free payment arrangement and the remittance of late payment penalty tax;
  • Australian Capital Territory offers an extensive range of land tax relief/ rates measures for both residential and commercial property owners;
  • New South Wales offers a land tax payment reduction and a payment instalment plan; and
  • Queensland offers a land tax waiver and rebate.

The taxation consequences of receiving land tax relief will depend on how it is delivered.

Eligibility criteria for many of the programs require landlords to have provided rent relief to their business tenants, and some require those business tenants to meet reduction in turnover eligibility requirements too.

If you would like any assistance or further information on the land tax relief offered, please get in touch on 9588 9000.

DETAIL

 

QLD All landowners for land tax purposes 3 month deferral of issue of land tax notices for the 2020-21 assessment year.
All foreign entity landowners for land tax purposes Waiver of the 2 per cent foreign land tax surcharge for foreign entities for the 2019-20 assessment year.
Eligible landowners that lease property in compliance with the leasing principles and provide rent relief to tenants financially impacted by COVID-19 A 25 per cent land tax rebate for the 2019-20 assessment year will be available for landowners in respect of their properties that meet the eligibility criteria. If eligible, it is expected that the rebate will firstly be applied to provide rent relief to tenants, with any remaining amount then able to be applied to the landowner’s own financial obligations.
OR
Eligible landowners that own property available for lease and comply with the leasing principles, whose ability to secure tenants has been affected by the COVID-19 pandemic and require relief to meet their financial obligations The rebate will only apply to each property that meets the eligibility requirements and conditions, rather than applying to the entire taxable land holdings of the landowner. In circumstances where there are multiple tenants for a single property (i.e. apartment buildings), including mixed-use developments, where the eligibility requirements are met for at least one tenancy, then the whole property is eligible for the land tax rebate. Applications for the 2019-20 land tax year can be made up to 31 October 2020 (extended from the original 30 June 2020 deadline) through the QLD Office of State Revenue Online portal. Applications for the 2020-21 land tax year can also now be made up to 26 February 2021 through the same portal.
VIC landowners for land tax purposes that have at least one non-residential property (e.g. commercial, industrial, vacant land that is not residential vacant land) and total taxable landholdings < AUD1m The land tax payment for 2020 (i.e. in relation to land owned as at 31 December 2019) can be deferred until after 1 January 2021 and will need to be paid in full by 31 March 2021. To the extent that land tax for 2020 has already been paid, a refund of the tax paid may be requested. The land tax will however be required to be paid in full by 31 March 2021.
Owner-occupiers of commercial property Owner-occupiers of commercial property can obtain a 25 per cent waiver of the property’s 2020 land tax and payment of the remaining tax can be deferred to 31 March 2021 if the business; has annual aggregated turnover of no greater than $50 million in either the 2018-19 or 2019-20 financial year and is an eligible recipient of the JobKeeper scheme, or is a licensed pub, club or restaurant under a general, full club or on-premises liquor licence where the annual turnover of the business at the premises is no greater than $50 million in either the 2018-19 or 2019-20 financial year and the turnover at that premises has reduced by at least 30% since March 2020. Eligible property owners will be able to apply for the land tax reduction through My Land Tax.
WA Taxpayers that can demonstrate COVID-19 has directly or indirectly affected their financial circumstances From 23 March 2020, the WA Office of State Revenue is remitting late payment penalties in full for taxpayers in certain circumstances.
Extension of time for paying tax and tax instalment arrangements can be made on application. From 23 March 2020 new payment arrangements will be interest free. Also applies to transfer duty, landholder duty, land tax and payroll tax. Application can be made through a web enquiry form via the WA online portal.
Commercial landlords that provide rent relief for a minimum of 3 months and freeze outgoings to small businesses that have suffered at least a 30 per cent reduction in turnover due to COVID-19 A grant equal to 25 per cent of the landlord’s 2019-20 land tax bill for the property in which an eligible tenant (i.e. small business with 30 per cent turnover reduction) is provided rent relief. The grant will be paid to landlords that meet the eligibility criteria. It is a condition of applying that the landlord will not seek to wholly or partially recover the rent and outgoings from the tenant(s) at the end of the 3 month period. In addition, to be eligible, the full waiver of rent and outgoings for 3 months must occur between 1 March 2020 and 31 May 2020.
NSW Eligible residential and commercial landlords who provide tenants impacted by COVID-19 with “rent relief”. Up to 25 per cent reduction of 2020 land tax payable on a parcel of land in the 2020 land tax year and a three month deferral for outstanding land tax payments where a rebate or waiver has been received.
Commercial tenants must have annual turnover of up to $50 million. The land tax reduction will only be granted where it is directly related to the property for which “rent relief” is provided to a tenant during the period 1 April 2020 to 30 September 2020.
Both residential and commercial tenants must be able to demonstrate “financial distress” resulting from COVID-19 The reduction of 2020 land tax will be the lesser of:

  • The amount of rent relief provided to a tenant for any period between 1 April 2020 – 30 September 2020
  • 25% of the land tax attributable to the parcel of land leased to that tenant.

Financial distress is considered to be:

  • Commercial tenants – a reduction in turnover compared to a previous comparable period of 30% or more due to COVID-19.
  • Residential tenants – a reduction in household income of 25% or more due to COVID-19. Any rent relief provided to a tenant must not be required to be paid back at a later date.
All landowners for land tax purposes The land tax payment date for 2020 land tax liabilities may be able to be extended and instalment payment arrangements may be entered into. Applications can be made through the RevenueNSW Online portal.
Australian corporations constructing build-to-rent developments after 1 July 2020 A 50 per cent discount on land tax for up to 15 years to developers who invest in build-to-rent schemes. To qualify, construction must have started on or after 1 July 2020 and the development must be held undivided for 15 years. A formal application must be made and additional conditions to be set out in Guidelines (yet to be released) must be satisfied.
An exemption from foreign investor land tax surcharge until 2040 for land held by an Australian corporation constructing a build-to-rent development. To qualify, construction must be carried out by the entity or a related entity and other conditions must be satisfied. Application is by way of refund of surcharge land tax paid made within 12 months of entitlement to the refund, but not later than 10 years after the land tax year concerned.
SA Entities with SA 2019-20 land tax liabilities Individuals and businesses with outstanding quarterly bills for 2019-20 are able to defer payments for six months (3rd and 4th quarter instalments). For 2020-21 Land Tax Transition Fund relief will be increased from 50 per cent to 100 per cent of the land tax increase based on existing relief criteria guidelines.
Commercial and residential landlords that provide rent relief to tenants impacted by COVID-19 and those able to demonstrate they are unable to secure a tenant due to COVID-19 Landlords providing eligible rent relief or unable to secure a tenant due to COVID-19 from 31 October 2020 to 30 April 2021 can receive a further 25 per cent reduction of the land tax payable on a parcel of land in the 2019-20 land tax year. This is in addition to the existing 25 per cent reduction based on eligible rent relief provided or rent forgone from 30 March 2020 to 30 October 2020.
Commercial tenants must have annual turnover of up to AUD50 million and must be eligible for JobKeeper Payment. Both residential and commercial tenants must be able to demonstrate they have been financially impacted by COVID-19 Financially impacted for Commercial tenants – a 30 per cent drop in revenue due to COVID-19 and eligible for JobKeeper Payment and Residential tenants must demonstrate financial hardship.