The Queensland Government has recently announced that property owners will be given land tax relief where their tenants have been impacted by Coronavirus.
Land tax relief Queensland measures
There are three Coronavirus land tax relief measures property owners may be eligible for:
- a land tax rebate reducing land tax liabilities by 25% for eligible properties for the 2019-20 assessment year
- a waiver of 2% land tax foreign surcharge for foreign entities for the 2019-20 assessment year
- a 3-month deferral of land tax liabilities for the 2020-21 assessment year.
Property owners do not need to apply for the foreign surcharge waiver or the 3-month deferral however the 25% Queensland land tax rebate must be applied for by 30 June 2020.
25% Land Tax Rebate
The land tax rebate will only apply to each property that meets the eligibility requirements and conditions.
Where there are multiple tenants for a single property, including mixed-use developments, if the eligibility requirements and conditions are met for at least one tenancy, then the whole property is eligible for the land tax rebate.
Property owners may be eligible for the land tax rebate if at least the following circumstances applies:
- Property owner is a landowner who leases all or part of a property to one or more tenants and all the following apply.
- The ability of one or more tenants to pay their normal rent is affected by the coronavirus (COVID-19) pandemic.
- The property owner will provide rent relief to the affected tenant(s) of an amount at least commensurate (in proportion) with the land tax rebate.
- The property owner will comply with the leasing principles even if the relevant lease is not regulated.
- Property owner is a landowner and all the following apply.
- All or part of the property is available for lease.
- The ability to secure tenants has been affected by the COVID-19 pandemic.
- Relief required to meet financial obligations.
- The leasing principles are complied with even if the relevant lease is not regulated.
If you are eligible for the land tax rebate under both the above circumstances, it is expected you will apply the rebate paid firstly to provide rent relief to your tenants. You can then apply any remaining rebate to your own financial obligations (e.g. in relation to debt and other expenses).
Please find below the leasing principles referred to in the criteria lists above:
Relief package for landlords and tenants – leasing principles for a commercial landowner
To be eligible for land tax relief, a landowner must commit to comply with the principles set out below. These principles will also be introduced into Queensland law.
If you are a commercial landowner, the principles are as follows:
- You will negotiate in good faith with your tenant to seek a mutually agreeable resolution if their ability to pay is impacted by COVID-19;
- You will not evict your tenant if they are in financial distress and unable to meet their commitments due to the impact of COVID-19;
- You will not increase rent, except where rent is linked to turnover;
- You will not penalise a tenant who stops trading or reduces opening hours;
- You will not charge any interest on unpaid or deferred rent; and
- You will not make a claim on a bank guarantee or security deposit for non-payment of rent.
In addition to these principles, the Prime Minister announced a mandatory code of conduct for small and medium enterprise commercial tenancies on 7 April 2020. The Palaszczuk Government will consult with stakeholders on the development of systems and implementation of the code in Queensland. Compliance with this code is not a requirement to receive land tax relief, but landowners with small and medium enterprise commercial tenancies are advised to familiarise themselves with the code. Visit www.australia.gov.au for further information.
There has not yet been a lot of guidance as to whether or how, you need to show you have passed the land tax rebate on to your tenants. Until further guidance is provided by the OSR/Qld Government we would suggest the following:
For properties where you as landowner pay the land tax – We suggest that when providing the rent reduction to your tenants, you clearly state the rent reduction is partly due to the Queensland land tax relief package. This should then be evidence you have passed on the rebate to your tenants by way of rent relief.
For properties where the tenant already pays the land tax – If you determine each property is eligible and you claim the land tax rebate of 25%, as your tenant pays the land tax directly, by applying for this rebate you are effectively giving them a rent reduction by reducing their outgoings to an amount equal to the land tax rebate you get.
If you meet the criteria and would like to apply for the rebate, please find below the link and information from the OSR website:
How to apply
Your 2019–20 land tax assessment notice will have the details of your land holdings. (If you have not received your notice, you can find it under the Assessments tab once you log onto OSR Online).
- Select My Land.
- Select Manage details.
To receive the rebate, you must include or update your contact details (including email and telephone number) and bank details so that we can contact you if necessary and pay the rebate into your nominated bank account.
- Select Manage exemptions then Lodge new exemption.
- Select COVID-19.
- Complete the application by certifying your eligibility and selecting the applicable land parcel(s).
- Complete the declaration.
To access future assessment notices electronically through OSR Online (rather than by post), select Assessments. If you select this option, you will receive an email when an assessment is available.
If you have not yet paid your land tax assessment for 2019-20 or are paying by instalments, and are eligible for land tax relief, we will issue a reassessment and adjust your instalment payments.
Please take the time to read our other articles relating to COVID-19.