NSW State Government is set to implement a $440 million land tax relief package as part of the national Code of Conduct proposed for commercial tenancies.
The new land tax relief package is expected to be divided approximately 50-50 between the commercial sector and the residential sector.
The measure will apply to commercial leases where the tenant is in financial distress due to COVID-19. Commercial landlords will be offered the land tax concession if they pass the savings on to tenants through a rent reduction.
Eligible landlords will be able to apply for a land tax concession of up to 25 per cent of their 2020 (calendar year) land tax liability on relevant properties. A further land tax deferral for any outstanding amounts for a three-month period will also be offered to landlords who claim the land tax concession.
Eligible business tenants are those with a turnover of less than $50 million, who are eligible for the Commonwealth's JobKeeper program, and that experience a 30 per cent (or more) reduction in revenue as a result of the COVID-19 pandemic.
The NSW Government will also provide the NSW Small Business Commission with extra staff and $10 million in funding to assist in implementing increased mediation and advisory services to commercial parties.The NSW Treasurer emphasised it was important that both landlords and tenants understood that the policy only applied to those businesses significantly impacted by COVID-19.
"If your circumstances have not significantly changed you need to fulfil the terms of your existing agreement." Mr Perrottet said.
Revenue NSW currently has put in place several measures to assist property taxpayers, such as extending deadlines for payments and applying leniency for late payment.
We are still waiting for the NSW Government to pass the legislation required to give effect to the Code of Conduct (the Code). See our recent article on the Code here.
Once landlords and tenants have concluded their rent negotiations, the amendments to the lease should be formalised by a variation of lease, which can be registered on title if the lease is registered or is required to be registered.
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