What is the Land Tax COVID-19 Relief?

The Land Tax COVID-19 Relief is a program to help commercial landlords manage their rental properties during the COVID-19 outbreak.

 

Background

The NSW Government has introduced measures to provide relief to commercial and residential landowners, who provide a reduction in rent to a tenant who is experiencing financial distress as a result of COVID-19.

The 2020 land tax COVID-19 relief is intended to reduce a landowner’s land tax payable for 2020, by up to 50 per cent, for a taxable parcel of land where rent relief has been given to the tenant who occupies that land.

 

Funding

A landowner can receive a reduction of up to 50 per cent of land tax payable for the 2020 land tax year, subject to the terms of these guidelines. There are two relief periods for which a landowner can apply for relief.

Period 1

A landowner providing a reduction in rent to a tenant between 1 April 2020 and 30 September 2020 can receive a reduction in land tax payable for the relevant parcel of land. The land tax reduction will be the lesser of:

  • the amount of rent reduction provided to an eligible tenant for any period between 1 April 2020 and 30 September 2020, or
  • 25 per cent of the land tax attributable to the parcel of land leased to that tenant.

Period 2

A landowner providing a reduction in rent to a tenant between 1 October 2020 and 31 December 2020 can receive a reduction in land tax payable for the relevant parcel of land. The land tax reduction will be the lesser of:

  • the amount of rent reduction provided to an eligible tenant for any period between 1 October 2020 to 31 December 2020, or
  • 25 per cent of the land tax attributable to the parcel of land leased to that tenant.

 

Eligibility

Landowners can be eligible for land tax relief for either, or both of these relief periods, provided all eligibility requirements are met.

You’ll be eligible if:

  • you’re leasing a parcel of land to:
    • a commercial tenant, who has an annual turnover of up to $50 million, or
    • a residential tenant,
  • the tenant is in financial distress as a result of COVID-19,
  • you reduce the rent of the affected tenant for any period between 1 April 2020 and 30 September 2020, and/or
  • you reduce the rent of the affected tenant for any period between 1 October 2020 and 31 December 2020,
  • and, for 2020, you have land tax attributable to the parcel of land leased to that tenant.

A tenant is considered to be in financial distress where:

  • for commercial tenants – there is a reduction in turnover compared to a previous comparable period of 30 per cent (or more),
  • for residential tenants – there is a reduction in household income of 25 per cent (or more).

You’re responsible for verifying that your tenant is in financial distress.

To be eligible, the rent reduction must not be required to be paid back at a later date. If a reduction in rent is provided but is required to be paid back at a later date, this is considered to be a deferral of rent and won’t be considered as a reduction of rent under this program.

 

Timing

Applications close 31 December 2020.

 

More Information

 

Media Release

The NSW Government announced that the Retail and Other Commercial Leases (COVID – 19) Regulation that was set to expire on 25 October 2020, will now be extended to 31 December 2020, with other states also extending measures to continue the operation of the National Code of Conduct.

Eligible landlords that reduce the rent of eligible commercial and residential tenants between 1 October 2020 and 31 December 2020 can apply for a land tax concession on relevant properties.

This new concession is in addition to the concession provided to landlords that reduced rent between April and September. The concession will be applied to any unpaid 2020 land tax liability, and refunds will be issued for payments already made this year.