Issue 9 of our State Taxation Series looks into land tax relief during the COVID-19 pandemic, more particularly, land tax reduction and the deferral of land tax for the 2020 year.
The Victorian government has implemented relief measures for land tax to support businesses and individuals during this trying period.
Understanding the relief measures is vital not just in appreciating the measures per se, but to enable yourself or your business to take the requisite steps in claiming the appropriate land tax relief available.
- Land tax reduction
Most landlords will, if not already, have been contacted by their tenants requesting for rent relief, be it in the form of a rent waiver or a deferral of rent.
In light of this, both landlords and tenants alike will be well aware of the various rent relief measures implemented by the Victorian government under the COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 (Vic).
Unfortunately, it is not as widely appreciated that flowing from such rent relief being afforded, landlords are entitled to a land tax reduction.
On the outset, commercial and residential landlords are eligible for a land tax reduction only if the property has been tenanted since before 29 March 2020.
Commercial and residential landlords who provide tenants with coronavirus rent relief consistent with the principles of the Support to Landlords and Tenants Package are able to claim a 25% reduction on the relevant property's land tax for the 2020 year.
Specifically, rent relief provided to tenants between 29 March 2020 and 29 September 2020 must be at least 25% of the 2020 proportional land tax liability (exclusive of absentee owner surcharge, if any) for that property. It should be noted that a landlord will not be eligible if only a deferral, not a reduction of rent is provided.
Commercial and residential landlords are also eligible to the land tax reduction for the 2020 year if they are unable to secure a tenant because of the COVID-19 pandemic.
Commercial landlords need to be particularly aware that the land tax reduction will only apply if the tenant satisfies the following criteria (to be provided in the form of a declaration from their tenant):
Licensed pub, club or restaurant under a general, full club or on-premises liquor licence:
- At the premises level, their turnover was no greater than $50 million in the 2018-2019 financial year, or their expected turnover in the 2019 – 2020 financial year is less than $50 million; and
- Their turnover at that premises has reduced by at least 30% since March 2020
Other commercial tenants:
- They have an annual aggregated turnover of up to $50 million; and
- They are eligible for, and participating in, the Commonwealth Government's JobKeeper Payment.
In order to receive this land tax reduction, eligible residential and commercial landlords must apply for the land tax reduction through the SRO's My Land Tax portal.
- Land tax deferral
Separately, Victorian land owners with at least one non-residential property have the option of deferring their land tax payments for the 2020 land tax assessments until 31 March 2021.
Please note however, this land tax deferral will only apply to land owners whose total taxable landholdings are below $1 million.
You will be notified by the SRO that your 2020 land tax assessment has been deferred for payment until 31 March 2021. No application is needed for this deferral.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.