NSW land tax reductions and other land tax reliefs

23-Apr-2020
The NSW Government is introducing measures to help commercial and residential landlords manage their rental properties.

Reduction of land tax

Eligible landlords will be able to apply for a NSW land tax reduction of up to 25% in respect of their 2020 (calendar year) land tax liability on ‘relevant’ NSW properties.

Broadly, the 2020 NSW land tax reduction is available to a land owner when:
  • The land that you are leasing out is being used for business or residential purposes
  • You are leasing the land to a residential tenant or a business tenant (with annual turnover of up to $50 million) and the tenant can demonstrate financial distress resulting from the COVID-19 outbreak
  • You reduce the rent of the affected tenant by at least as much as the tax reduction
  • The land tax is directly related to the property for which rent has been reduced
Financial distress is considered to be as follows:

  • For commercial tenants - a 30 per cent drop in revenue due to COVID-19 pandemic
  • For residential tenants - a 25 per cent drop in household income due to COVID-19

Three-month deferral of outstanding land tax

A landlord who applies for the NSW land tax reduction of up to 25% will also be able to apply for a 3-months deferral for outstanding land tax payments. In addition to these measures, there are several options available to landlords such as extending deadlines for payments and getting leniency for late payment of land tax.

We see some of the issues that require consideration by Revenue-NSW include the following:

  • How does a landlord and or a tenant demonstrate (substantiate) that their respective ‘financial distress’ is the result of the Covid-19 outbreak?
  • From what date are the measures applicable, from what date does the landlord or tenant need to demonstrate ‘financial stress’?
  • How is annual ‘turnover’ measured, it is on an ‘aggregated basis’?
  • What is the form of evidence of a rent reduction being provided to a tenant, what about reduced rents for incoming new tenants?
  • What happens where the landlord and tenant are related parties, e.g. family and or related business entities?
  • What happens to 2020 land tax already paid, particularly for landlords who have already paid their entire 2020 land tax liability?
  • To obtain a deferral of land tax, what is meant by ‘outstanding land tax payments’?
Given the infancy of these land tax measures, the NSW Government will be releasing further details and hopefully address these issues.


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