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Land Tax Relief Legislated for Victorians

Giancarlo Romano
Adam Pincus
Article by Giancarlo Romano & Adam Pincus

On 28 April 2020, the Victorian Parliament enacted the State Taxation Acts Amendment (Relief Measures) Act 2020 Vic (“the Act”). The primary purpose and effect of the Act is to provide land tax relief for landowners whose earning capacity has been diminished by the COVID-19 crisis. These measures are summarised below.

2020 Land Tax Deferrals

Payment of 2020 land tax may be deferred until 31 March 2021 for eligible landowners who:

  1. have at least one taxable, non-residential property; and
  2. have total taxable landholdings of less than $1 million.

This is irrespective of whether the properties are tenanted or any tenants have been provided relief. ‘Non-residential property’ includes commercial property, industrial property and vacant land, but not vacant residential land. Land tax deferrals are not available for landowners of exclusively residential property.

At this stage, landowners eligible for the deferral scheme do not need to take any action. The Victorian State Revenue Office will be contacting all eligible landowners directly.

Deferral and Reduction

If landowners don’t meet the deferral criteria above, they can still apply for a deferral until 31 March 2021 and also apply for a 25% discount on land tax in certain circumstances.

IF TENANTED: Landowners of commercial and residential properties who provide crisis-impacted tenants with rent relief may be eligible for a 25% reduction on the 2020 land tax assessed for that specific tenanted property (be it proportional or single-holding). To achieve this reduction, landowners must demonstrate that:

  1. All or part of the property is rented out (if not, see below);
  2. The tenant has suffered a reduction in earning capacity which has impacted on their ability to pay normal rent;
  3. For commercial tenancies –
    1. the tenant has an annual turnover of less than $50 million; and
    2. is eligible for the Australian Government’s JobKeeper Payment; and
  4. The value of the rent relief package provided by the landlord to the tenant in dollar terms equals or exceeds the value of 25% of the land tax assessed on that property.

Note, eligibility for this measure is assessed on each individual property in a landowner’s portfolio, and not on a collective calculation of all properties held. The relief offered to that specific tenant must equal/exceed 25% of the proportional land tax assessed on that property for the discount to be available.

Example:

  1. A landowner holds a number of properties. Their total land tax bill is assessed at $50,000.00. Land tax on one of the tenanted properties is assessed at $10,000.00 for 2020. The landowner gives the tenant a $3,000.00 reduction in rent. As this relief is more than 25% of the $10,000 land tax payable, the landowner is now eligible for a $2,500.00 reduction in land tax on that particular property, and may defer payment of the remaining $7,500.00 until 31 March 2020. The remaining $40,000.00 on the land tax bill must be paid as normal, unless the above eligibility criteria apply in respect of one or more of the other properties or one or more of the properties is vacant as a result of a crisis (see below).

Importantly, for landowners this means that, depending on their land tax assessment, it may in some circumstances be beneficial for them to provide their tenant with slightly more rent relief if it means the landowner will then qualify for the land tax reduction. You may wish to consult with us to determine whether this course of action is right for you.

IF VACANT: The same relief is available for landowners who are unable to secure a tenant because of the COVID-19 crisis. Landowners must be able to prove that their inability to find a tenant is a direct result of the crisis and not some other reason.

What if I have already paid my 2020 land tax?

Landowners who meet either or both of the above deferral and/or reduction criteria may request a refund of 2020 land tax paid.

Landowners who are eligible for a deferral only, but not eligible for a reduction, will be contacted by the State Revenue Office about the refund process in the coming weeks. There is nothing further for you to do at this stage.

Landowners who will be applying for both a deferral and reduction will need to apply through the My Land Tax portal (see below).

How do I apply for a land tax reduction?

Landowners eligible for rent reduction will be able to apply through the My Land Tax portal from Friday, 1 May 2020. In order to do so and to view your total taxable landholding, you will need to register for your My Land Tax portal here.

It is not yet clear just how long these relief measures will remain available, but a timeline is anticipated once the window commences and we suspect it would remain for the same duration that the Jobkeeper scheme is open.

Our team will continue to provide updates relevant to the industry and we remain available to assist anyone who may require advices on the above.

About Best Hooper – Victoria’s Property, Planning and Land Development Advisory Law Firm

Best Hooper are the oldest and most prominent developer focused law firm in Victoria who have served our community since 1886; through wars, recessions, depressions and pandemics. We are actively advising clients in relation to the COVID-19 outbreak on all property related matters including leasing, disputes, property transactions and planning advices and applications. We are continuously recognised as industry leaders in a variety of publications, including Doyles Guide and Best Lawyers.

If you have any questions about this article or require more information, please contact Giancarlo Romano, (03) 9691 0220 or gromano@besthooper.com.au

Giancarlo Romano is a Senior Associate in the Best Hooper Property Team who represents private and corporate landlords and tenants across commercial, retail and residential leasing and all facets of property transactions.

Giancarlo Romano

Principal Lawyer
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Adam Pincus

Lawyer
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