Tenancy Relief/Landlord Claims/Land Tax Relief

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We enclose summary and related links from 3 different government sites i.e. Service NSW, Revenue and Fair Trading.

Commercial tenancy support package information on Service NSW https://www.service.nsw.gov.au/campaign/covid-19-help-businesses/commercial-lease-support

Residential tenancy support package information on Fair Trading https://www.fairtrading.nsw.gov.au/resource-library/publications/coronavirus-covid-19/property/moratorium

Land tax relief guidelines & FAQ on Revenue NSW (land tax relief available to residential and non-residential landlords) https://www.revenue.nsw.gov.au/news-media-releases/covid-19-tax-relief-measures/2021-land-tax-covid-19-relief-guidelines-jul-dec

Land tax relief to apply on Service NSW – open soon, link below https://www.service.nsw.gov.au/transaction/apply-covid-19-land-tax-relief

Commercial Leases – Lockouts

If your business was unable to meet its lease commitments from 13 July 2021 to 20 August 2021 due to the COVID 19 pandemic, under the regulations, landlords are not able to lock out or evict tenants without going to mediation.

Land Tax Relief – Residential, Retail and Commercial tenancies

The NSW Government has introduced measures to provide relief to commercial and residential owners who provide a reduction in rent to a tenant who is experiencing financial distress as a result of COVID19.

The 2021 land tax COVID 19 relief is intended to reduce a landlord’s land tax payable for 2021 up to 100% of land tax paid, for a taxable parcel of land where rent relief has been given to the tenant who occupies that land.

Applications will open late July 2021.

The reduction in rent to a tenant applies to the period between 1 July 2021 and 31 December 2021.The reduction will be the lesser of rent relief and 100% of land tax attributable to the parcel of land leased to that tenant.

CRITICAL IMPORTANT ISSUES

Eligibility for Land Tax relief

- A commercial tenant must have an annual turnover of up to $50 million and is eligible to be approved for either of the Micro business COVID 19 support grant, the 2021 COVID19 NSW business grant and/or the JobSaver scheme.

- A residential tenant who has a reduction in household income of 25% or more as a result of COVID19 and in which the landlord is not claiming the Residential Tenancy Support Programme.

BEFORE APPLYING

The landlord is responsible for verifying that:-

- Residential tenant is in financial distress

- Your commercial tenant is eligible for either of the Microbusiness, Support Grant or JobSaver Support schemes

RESIDENTIAL SUPPORT PACKAGE

- A 60-day freeze on evictions from 14.7.21 to 11.9.21 and burden of proof from tenant of a 25% COVID based income reduction and provision of evidence by that tenant.

- Landlord can claim a rebate up to $1500 for up to the lower of the rent reduction and $1500. (This is not addition to Land Tax Relief above and they are mutually exclusive).

ACTION PLAN

There will be an active mediation between tenants and landlords. Please ensure that if you are a landlord, you can get relief on land tax for any rent reductions thereon. Any reduction in rent cannot be clawed back in later periods under the scheme.

Given the envisaged length of lockdown and potential slow reopening, a potential commercial solution may be to review the land tax on the parcel of tenancy, amortise over 3-4 months and calculate a potential waiver in rent reduction.

Also, the use of a deferral for the balance may be used but doesn’t count for land tax relief purposes.

There is no silver bullet for landlords or tenants thereon. I think an equitable basis is to review the tenant’s turnover reduction and this should be done on a monthly basis.

Tenants

Should try and negotiate a rent reduction on a pro rata basis to turnover on a month-by-month basis and negotiate this now.

Landlords

Should review on a month-by-month basis and review any rent reductions based on turnover reductions and any receipts of Job Grant and JobSaver received by the tenant.

Importantly the only cover landlords have is the level of land tax paid for any relief applied.

If you have any further issues, please do not hesitate to contact this office.

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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I would like to say that Loewy Consulting Partners provide prompt and helpful advice in processing my income tax and in dealing with the Australian taxation office and highly recommend their services to my colleagues. The staff are friendly and always available to assist with knowledgeable advice.

Dr Robert Mansberg
MB BS FRACP, Consultant Physician in Nuclear Medicine, Concord and Nepean Hospitals, Clinical Lecturer, Discipline of Imaging, University of Sydney