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. NSW, Queensland and Victorian State Governments have announced Land Tax Relief packages totalling almost one billion dollars to assist in the provision of support to retail tenants experiencing hardship as a consequence of COVID-19.
The Victorian Government’s $500m Land Tax Relief package was announced yesterday, Wednesday 15 April, following the NSW State Government’s $440 million land tax relief package and the Queensland Government’s $400 million Land Tax Relief package announced earlier in the week.
The Shopping Centre Council of Australia (SCCA) said the Victorian Government’s $500m Land Tax Relief package will help underpin the provision of relief to Victorian SME retailers experiencing hardship as a result of COVID-19.
The Victorian package is made up of $420 million in land tax relief for both commercial and residential landlords, and an $80 million rental assistance fund for tenants.
SCCA Executive Director Angus Nardi said: “We welcome Premier Andrews’ announcement which is another strong step that reinforces the framework which will deliver relief to small, medium and family retailers who are doing it tough.
“We also commend the Government on their commitment to a partnership approach to help ensure that all businesses can get to the other side of this crisis,” said Nardi.
“This is a further example of how Governments, shopping centre owners and SME retailers can work together to manage the impacts of the COVID-19 pandemic.”
Victoria’s parliament will be recalled for an emergency sitting next Thursday to pass the new package. The measures will apply to commercial leases where the tenant is in financial distress due to COVID-19, including but not limited to shops, cafes, gyms, hairdressers, restaurants, offices, warehouses and industrial sites.
The Queensland 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.
“We commend the Queensland Government on this package, and it is welcome news for shopping centres and retailers. It’s is a strong and positive step by the Queensland Government which is aligned with the principles set out in the Code of Conduct which was released earlier this week.” said Nardi.
For the 2020-21 land tax year, a 3 month deferral of land tax liabilities will apply.
The Government has also announced that it will change legislation to ban evictions on the grounds of financial distress.
“This announcement reinforces this commitment and sends a strong signal that retailers can sit down with their landlords to discuss rent relief and business continuity with confidence,” Nardi said.
In New South Wales, the $440 million land tax relief package is expected to be divided approximately 50-50 with around $220 million going to the commercial sector and a further $220 million expected to benefit the residential sector.
Commercial landlords will be offered the land tax concession if they pass the savings on to tenants through a rent reduction.
Eligible landlords will be able to apply for a land tax concession of up to 25% of their 2020 (calendar year) land tax liability on relevant properties. A further land tax deferral for any outstanding amounts for a three-month period will also be offered to landlords who claim the land tax concession.
The incoming Chief Executive Officer of the Australian Retailers Association, Paul Zahra, welcomed the NSW government’s $440 million land tax relief package, saying the scheme provided “major rent relief” for retailers suffering from the impact of the Coronavirus.
“This package provides not only significant tax concessions for landlords but also a clear framework for negotiations and access to mediation services. In all, it gives landlords and retailers comfort to begin to negotiate constructively and in good faith on a fair deal for both parties,” Zahra said.
Revenue NSW have stated that no refunds will be provided for payments already made. Landowners who pay in instalments will not receive the land tax 1.5% early payment discount and will accrue interest on any overdue debt.
In Western Australia, the State Government has announced that landowners can apply for an interest-free payment arrangement and for late payment penalties to be waived in relation to land tax.
A land tax waiver for the 2020-21 financial year has been announced for certain commercial properties in Tasmania. All landowners can apply for a deferral or payment arrangement if they are experiencing financial hardship paying their land tax.
In South Australia, landowners paying land tax quarterly in 2019-20 will be able to defer payment of their third and fourth quarter instalments for up to six months.
The ACT Revenue Office has announced that a land tax credit may be available for eligible landowners.
There is no land tax in the Northern Territory.
Landlords must negotiate rent relief agreements with tenants in financial distress due to COVID-19 by applying the leasing principles in the Code:
- A ban on the termination of a lease for non-payment of rent
- A freeze in rent increases
- To facilitate these changes, and deliver increased mediation and advisory services to commercial parties, the NSW Small Business Commission will be bolstered with extra staff and an injection of $10 million from the $1 billion Working for NSW Fund
On 26 March, the SCCA and its members announced that no SME or family retailer in its members’ shopping centres would face a termination of their lease as a result of financial hardship caused by the COVID-19 pandemic.
The Shopping Centre Council continues to work closely with the National Retail Association, Australian Retailers Association and Pharmacy Guild of Australia in relation to national retail leasing and industry issues, and will continue to engage with all state governments in relation to regulation on the new Code of Conduct.
Prime Minister Scott Morrison released the National Cabinet Mandatory Code Of Conduct – SME Leasing Principles During COVID-19 on Tuesday, 7 April.