2020 Land Tax Covid-19 Relief

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6th May 2020

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 25 per cent, for a taxable parcel of land where rent relief has been given to the tenant who occupies that land.

Landowners eligible for the reduction may also defer their land tax payments by up to three months.

Relief available

Reduction in land tax payable

You’ll receive a reduction in your land tax payable for the 2020 land tax year. The reduction will be the lesser of:

• the amount of rent reduction provided to a tenant for any period between 1 April 2020 and 30 September 2020

• 25 per cent of the land tax attributable to the parcel of land leased to that tenant.

Land tax attributable to a parcel of land is calculated as follows:

Taxable value of the parcel of land divided by aggregate taxable value of all parcels of land, multiplied by landowner’s 2020 land tax liability.

If you haven’t completed payment of you land tax for 2020, the relief will reduce or offset the amount you have left payable. If you have already paid your land tax for 2020, the reduction can be refunded to you.

Three month deferral of outstanding land tax

If you receive a reduction under this program, you’ll also be able to have your outstanding land tax payments deferred for up to three months.

Eligibility criteria

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

• for 2020, you have land tax attributable to the parcel of land leased to that tenant.

Financial distress

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.

Rent reduction

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.

How to apply

2020 land tax COVID-19 relief application is available online via Service NSW, click on link below:

https://www.service.nsw.gov.au/transaction/apply-covid-19-land-tax-relief?q=transaction+apply+covid+19+land+tax+relief

You’ll need the following to complete an application:

• MyServiceNSW Account

• Proof of identity

• Land Tax Client ID

• Land Tax Correspondence ID

• Land details for parcel of land the relief is being applied for

• Electronic Fund Transfer Details

• Supporting documentation to demonstrate eligibility.

Examples of supporting documents include, but are not limited to:

• To demonstrate that you are providing a rent reduction – copies of tenancy agreements, rental ledgers, a letter from the property manager, etc.

• To demonstrate that your tenant is in financial distress as defined in these guidelines – your tenant’s financial statements, a letter from their accountant or property manager, etc. (you must obtain your tenant’s permission to share their information with us).

Should further evidence be required to determine the eligibility or validity of an application, they will contact you.

Other conditions

Once an application is submitted, you must notify them by submitting an amended application as soon as practicable if there is a change in your circumstances or eligibility for the program. This includes a change in tenant or a change in rent during the period for which an application has been submitted.

Eligibility of both landowners and tenants can be reviewed to confirm that relief under this program has been correctly requested and applied.

Providing false or misleading information in an application for 2020 land tax COVID-19 relief, or not notifying them of a change in your circumstances, may result in a land tax reduction under this program being revoked. It’s also an offence to provide false or misleading information and penalties may apply.

Important: Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. Client Alert is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.


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