Haven't paid your land tax yet? Here's the silver lining.
Eligible landowners may now apply to a new NSW Government program, which provides eligible commercial and residential landowners a reduction in their land tax of up to 25 per cent.
The eligibility requirements coincide with the National Cabinet’s Commercial Leasing Code of Conduct. Primarily, that landowners are expected to negotiate with tenants financially impacted by COVID-19.
Landowners of commercial tenancies may be eligible for relief if their tenant’s annual turnover is less than $50 million and as a result of the COVID-19 pandemic, have experienced a turnover reduction of at least 30 per cent compared to a previous comparable period. Landowners of residential tenancies may be eligible if the tenant’s household income has been reduced by at least 25 per cent as a result of the COVID-19 pandemic. Additionally, the landowner must have reduced and waived the rent of the affected tenant for any period between 1 April and 30 September 2020. Landowners, who instead defer the rent, are not eligible.
Revenue NSW confirm the land tax reduction will be the lesser of:
an amount of reduction of rent provided to the tenant at any point 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.
Eligible landowners may also defer outstanding land tax payments for up to three months without interest.
The landowner must submit evidence of a rent reduction when lodging the application with Services NSW. Evidence may include tenancy agreements recording reduced rent, rental ledgers or a letter from a property manager. The landowner must also submit evidence of the tenants reduced income or turnover, due to the COVID-19 pandemic, such as copies of the tenant’s financial statements or a letter from the tenant’s accountant.
If the landowner’s circumstances change, such as a new tenant, or variation of rent payable, or if the tenant vacates the premises, the landowner must submit an amended application with Services NSW. This may result in a recalculation of the land tax relief.
Finally, where the landowner receives a reduction in land tax and the tenant would ordinarily contribute to that charge, the tenant is exempt from paying that charge to the extent of the reduction.
With the responsibility on the landowner to verify the tenant’s financial distress in order to be eligible for land tax relief, it is integral landowners and tenants continue to work together and act in good faith.
Please contact the following persons should you or your business require any advice:
Ron Zucker +61 410 590 111
Vincent Tripodina +61 408 228 108
Chelsea Woodward +61 404 065 899
Michael Mulvenna +61 424 622 174