COVID-19 | Land tax relief for landlords in NSW

The NSW Government has introduced further land tax relief measures for the 2021 Land Tax Year to landlords who provide rent relief waivers to tenants experiencing financial distress due to the COVID-19 pandemic.

Eligibility

For a landlord to be eligible for relief for the 2021 Land Tax Year the following criteria apply and must be met by a landlord:

• be leasing property on a parcel of land to:
  • a commercial tenant who has:
    • an annual turnover of up to $50 million, and is eligible for the:
      • Micro-business COVID-19 Support Grant;
      • 2021 COVID-19 NSW Business Grant; and/or
      • JobSaver scheme; or
  • a residential tenant who has lost 25% or more of household income due to COVID-19;
• have reduced the rent of the affected tenant for any period between 1 July 2021 and 31 December 2021;
• have provided the rent reduction without any requirement for any amount to be paid back at a later date for example by way of rental waivers and not a deferment of rent; and
• have a 2021 land tax liability attributable to the parcel of land where the rent reduction has been given.

A tenant of Crown or Local Government land that is deemed to be an owner for land tax purposes under the Land Tax Management Act 1956 (NSW) may also apply for relief if they are subleasing the land to an eligible tenant as described above.

Reduction in land tax payable

The land tax relief will be a reduction in the 2021 land tax payable on the parcel of land where rent relief has been given to the tenant who occupies that land and will be the lesser of:

• the amount of rent reduction provided by a landlord to an eligible tenant for any period between 1 July 2021 and 31 December 2021; or
• 100 per cent of the land tax attributable to the parcel of land leased to that tenant.

Any land tax relief provided to a landlord by Revenue NSW for the 1 January 2021 – 28 March 2021 relief period of which applications closed on 31 May 2021 will be taken into account when applying for relief under these updated measures. Therefore, the maximum land tax relief a landlord may claim for the 2021 Land Tax Year is 100 percent of land tax payable for the 2021 Land Tax Year.

Payment of land tax relief

The land tax relief will:

• be paid as a refund if payment of the land tax has already been made by a landlord; or
• be used to offset the balance of the amount of land tax payable if payment has not been completed for the 2021 Land Tax Year.

There is no requirement for rent reduction negotiations to be concluded or for all rent reductions to have been waived when applying for land tax relief however if circumstances do change following submission of any application updated information will need to be provided to Revenue NSW immediately.

How can we help?

At Gadens, our Real Estate and Construction Team and Tax Team are well equipped to advise and assist clients with queries relating to rent relief negotiations and any tax relief. We are here to help and invite you to contact our office should you require any assistance.

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For details of all our COVID-19 tips and updates, visit the Gadens COVID-19 Hub.

Authored by:

Archie Smith, Partner
Belinda Drivas, Senior Associate