In response to COVID-19, the states and territories have announced a range of land tax measures to help landowners manage some of the challenges COVID-19 has presented. Each state and territory has different eligibility requirements and relief concessions. Below we discuss what it means for landowners across each jurisdiction.
Victoria
On 15 April 2020, the Victorian Premier announced that eligible landlords will receive a 25% reduction of their 2020 land tax and may defer the payment of their remaining 2020 land tax liability until 31 March 2021. On 20 August 2020, the land tax relief program was expanded to allow for a 50% reduction in 2020 land tax in certain circumstances.
25% reduction - who is eligible?
Landlords of commercial and residential properties who provide tenants impacted by COVID-19 with rent relief may be eligible for the land tax relief. For landlords of commercial properties, the property must be rented to a tenant with an aggregated turnover of up to $50 million, the tenant's ability to pay their normal rent must be affected by COVID-19 and the tenant must be eligible for, and participating in, the Commonwealth Government’s JobKeeper Payment program. The tenant must also provide a declaration to the landlord that they meet the relevant eligibility criteria.
'Rent relief' requires that residential and commercial landlords pass on at least an amount equivalent to the 25% tax discount to their tenants. Note that deferral of rent (as opposed to a waiver) will generally not qualify as 'rent relief'. All rent relief must also comply with the Victorian Government's Commercial Tenancy Relief Scheme.
For commercial landlords with multiple tenancies in one property that are separately rated for land tax, eligibility will be assessed in respect of each tenancy as if it were a separate property. Where the tenancies are not separately valued, the State Revenue Office will apportion any land tax relief available by reference to the eligible tenancies.
50% reduction - who is eligible?
Landlords must meet all pre-existing criteria for the 25% land tax reduction to obtain the increased 50% reduction. Further, they must provide additional rent relief in the form of an outright waiver of at least 50% of the rent payable for at least three months. The months do not have to be consecutive, and can be any time between 29 March 2020 and 31 December 2020.
Landlords who applied for the 25% reduction prior to 20 August 2020 must apply again if seeking to claim the 50% reduction.
Untenanted properties
A 25% reduction is also available to land owners who are unable to secure a tenant because of COVID-19. The property must have been tenanted in March 2020 under an eligible lease that the tenant did not fulfil and must have been subsequently vacant for a continuous period of three months because of COVID-19.
Owner-occupiers
As announced on 20 August 2020, a 25% reduction of 2020 land tax is now also available to owner-occupiers of commercial property. These taxpayers must own the property and the business located on the property (whether directly or indirectly through a company or trust) and must actively conduct a business on the property. Generally, the business must have an aggregated turnover of no more than $50 million and be eligible for, and participating in, the Commonwealth Government's JobKeeper Payment program.
New South Wales
On 13 April 2020, the NSW Treasurer announced that eligible landlords of commercial and residential properties will be able to apply for a reduction of up to 25% of their 2020 land tax. Landlords who qualify for this reduction will also be eligible for a three month deferral of outstanding land tax payments.
Additionally, Revenue NSW has put in place a number of measures to assist landowners, such as extending deadlines for payments, allowing tax to be paid in instalments and applying leniency for late payment. However, landowners who pay by instalments will not receive the current land tax 1.5% early payment discount.
Original reduction of up to 25% - is eligible?
The original 2020 land tax reduction of up to 25% will only be available where various criteria are satisfied. For commercial landlords, these include that there is land tax attributable to the parcel of land, the tenant is in financial distress as a result of COVID-19, the tenant has an annual turnover of no more than $50 million and the landlord reduces the rent for any period between 1 April 2020 and 30 September 2020.
Additional reduction of up to 25% – who is eligible?
Landlords are eligible for an additional 2020 land tax reduction of up to 25% where the landlord reduces rent for any period between 1 October 2020 and 31 December 2020, and otherwise meets the criteria applicable for the original 25% reduction.
A tenant will be in 'financial distress' if they experience a reduction in turnover of 30% or more. Landlords must reduce the rent by an amount equivalent to 25% of the land tax attributable to the parcel of land for each of the concession periods to receive the full 50% reduction in land tax. Landlords cannot require a tenant to pay back the reduction at a later date.
Landlords who have already applied for the original 25% land tax reduction must submit a new application if applying for the additional 25% land tax reduction.
South Australia
The SA Government has announced that eligible landlords may apply for a reduction of up to 25% on their 2019-20 land tax. The SA Government recently announced that the SA land tax relief regime would be extended to provide for an additional 25% reduction on 2019-2020 land tax in certain circumstances.
Additionally, landowners paying land tax quarterly in 2019-20 will be able to defer payment of their third quarter instalments for up to six months and fourth quarter instalments for up to three months. The deferral is available to all landowners paying quarterly land tax in 2019-20 and no application is required.
The previously announced land tax reform transitional relief will be increased from 50% to 100% of the land tax increase in an eligible landowner's 2020-21 land tax assessment. The transitional relief is available to eligible landowners whose land tax liability increases because of the changes in aggregation of landholdings (which commenced on 1 July 2020).
Original reduction of up to 25% - who is eligible?
The original 2020 land tax reduction of up to 25% will only be available where various criteria are satisfied. For commercial landlords, these include that the landlord has no outstanding land tax debt prior to 2019-20, the tenant is eligible for the Australian Government's JobKeeper payment, the tenant has an annual turnover of no more than $50 million and the landlord reduces the rent by as much as the land tax reduction for any period between 30 March 2020 and 30 October 2020.
This reduction is also available to landowners who are unable to secure a tenant because of COVID-19. The landowner will need to demonstrate that the land was leased to 30 March 2020 but has since been vacated due to the impact of COVID-19.
Applications for the original reduction closed on 30 September 2020.
Additional reduction of up to 25% - who is eligible?
Landlords are eligible for an additional 2020 land tax reduction of up to 25% where the landlord reduces the rent by as much as the land tax reduction for any period between 31 October 2020 and 30 April 2021, and otherwise meets the criteria applicable for the original 25% reduction.
Landlords who have already applied for the original 25% land tax reduction must submit a new application if applying for the additional 25% land tax reduction.
Owner-occupier – 25% reduction
As announced on 8 September 2020, a reduction of 25% of 2019-2020 land tax is available to certain eligible owner-occupiers of commercial property. These include owner-occupiers who actively conduct business on their property, have an annual turnover of no more than $50 million and are eligible for the Australian Government's JobKeeper payment from 31 October 2020.
Western Australia
In April 2020 the WA Government announced that commercial landlords can apply for grants equivalent to 25% of their land tax 2019-20 liability for certain qualifying property. These grants will apply equally to the Metropolitan Region Improvement Tax. In October 2020, the WA Government extended its relief program by announcing an additional concession period from 1 September 2020 to 31 December 2020, meaning certain eligible landlords can now receive grants equivalent to up to 50% of their 2019-20 land tax liability.
Additionally, landowners can apply for an interest-free payment arrangement and for late payment penalties to be waived in relation to the payment of their land tax.
Who is eligible?
The grants are available to commercial landlords who provide rent relief to their small business tenants. The tenant must be considered a small business as defined by the Small Business Development Corporation Act 1983 (WA) and have suffered a 30% (or more) reduction in turnover due to the impact of COVID-19 as defined by the Commonwealth Government's JobKeeper payment.
Rent relief requires that the landlord waive rent and outgoings for a three month period or equivalent for either (or both, as applicable) of the following periods:
- 1 March 2020 to 31 August 2020; and
- 1 September 2020 to 31 December 2020.
The landlord must be unable to seek to recover the waived rent or outgoings at the end of the period. Outgoings must also be frozen for a period of six months starting from the same date as the rent waiver.
Additionally, each property included in the application must have an unimproved value of $300,000 or more and be subject to land tax. Landlords must apply for the rent relief grants from 1 May 2020 and payment of the grants can be expected for successful applicants 6 weeks after the date the application was submitted.
To apply for payment arrangements and for late penalties to be waived, landowners must be able to demonstrate that their financial circumstances have been directly or indirectly impacted by COVID-19. To benefit from these measures, landowners may apply online or by phone.
Note that if a landlord has already applied for the original relief, a new application will need to be made if applying for the additional relief.
Tasmania
The Tasmanian State Revenue Office has announced that a landowner can apply for a deferral or payment arrangement in respect of land tax if they are experiencing financial hardship (however qualifying criteria are yet to be published).
While the Tasmanian Government has not introduced specific 2019-20 land tax relief measures, it has enacted legislation to allow the Tasmanian Commissioner of State Revenue to waive land tax for qualifying commercial properties for the 2020-21 financial year.
Who is eligible?
The 2020-21 land tax waiver will generally only be available for a 'commercial property' (as classified for Government valuation purposes) where the owner of the land can demonstrate that they have been adversely financially impacted by COVID-19 in a way that is 'unexpected and not insignificant'. It appears that relief may be available to not only landlords, but also to qualifying land owners that run an active business on their land.
Applications for relief can be made by 30 June 2021.
Queensland
The Qld State Government has announced a number of land tax relief measures in response to the COVID-19 pandemic.
For the 2019-20 land tax year, the foreign land tax surcharge will be waived for all relevant foreign owned properties and a separate 25% land tax rebate is available for certain eligible properties.
For the 2020-21 land tax year, a 3 month deferral of land tax liabilities will apply.
2019-2020 land tax relief of up to 25%- who is eligible?
Landowners are eligible for the 25% land tax reduction where the property is leased, the relevant tenant is unable to pay normal rent due to the adverse effects of COVID-19 and the landowner agrees to abide by the Queensland Treasury's leasing principles and pass on the land tax saved to the tenant as rent relief.
Landowners will also be eligible where they are unable to secure tenants for an available property because of COVID-19, the landowner requires financial assistance and agrees to comply with the Queensland Treasury's leasing principles.
2020-2021 land tax relief – who is eligible?
Landlords who provide rent relief that is at least equal to 25% of the 2020-21 land tax on the relevant property (and otherwise meet the same criteria as for the 2019-2020 land tax relief) are eligible for the 2020-2021 land tax relief.
Landlords who have already applied for the 2019-2020 land tax relief must submit a new application if applying for the 2020-2021 land tax relief.
Australian Capital Territory
The ACT Government has announced a number of measures in response to the COVID-19 pandemic:
Eligible residential landowners may apply for a land tax credit.
Whilst not a land tax measure, we note that eligible commercial landlords may receive rent reduction support in the form of a rates rebate of up to $8,000 per quarter. In addition to this, a rates rebate of $2,622 will be automatically applied to commercial properties with an average unimproved value of $2 million or less.
Who is eligible?
Landlords who reduce rent on privately rented residential properties by at least 25% due to COVID-19 will be eligible for a land tax credit to cover 50% of the rental reduction, up to a maximum credit of $1,300 per quarter.
Commercial landlords of properties with an average unimproved value of $2 million or below, with tenants who have been directly impacted by COVID-19, can apply for a rates rebate if they reduce rent for their tenants. The amount of the rates rebate available will depend on the degree to which the tenant's business is affected by COVID-19.
If the tenant's business has experienced at least a 30% reduction in business income, the landlord can receive 25% of any rent reduction provided to tenants as a rates rebate. This relief is capped at the lower of $5000 per quarter or total quarterly rates.
If the tenant's business has experienced at least an 80% reduction in business income, the landlord can receive 50% of any rent reduction provided to tenants as a rates rebate. This relief is capped at the lower of $8000 per quarter or total quarterly rates.
The rebate does not apply to rents that have been deferred.
The relief may also be available for owner-operators of commercial property.
Northern Territory
N/A. There is no land tax in the Northern Territory.
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