Queensland Land Tax Relief Measures

By 16 April 2020Property
Queensland Land Tax Relief Measures

On 9 April 2020 the Queensland Government announced its support package for landlords and tenants, both commercial and residential, impacted by the COVID-19 disaster.

The announced package includes:

  • 3-month deferral of land tax liabilities for the 2020-21 assessment year.
  • waiver of the 2% land tax foreign surcharge for foreign entities for the 2019-20 assessment year.
  • land tax rebate of 25% of the 2019-2020 land tax year for eligible landlords, which is to be passed through to its tenants.
  • a set of leasing principles a landlord must agree to as a condition of applying for the land tax rebate.
  • temporary legislative changes to protect eligible tenants, including eviction moratoriums and rent freezes.
  • a crisis payment of $500 per week for up to four weeks in rent relief for residential tenants who are homeless, or at imminent risk of becoming homeless and have exhausted other options

Land Tax Relief

Announced available land tax relief from the Queensland Government includes:

  • a land tax rebate reducing land tax liabilities by 25% for eligible properties for the 2019-20 assessment year
  • a waiver of the 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.

Land tax relief applications are being managed by the Office of State Revenue. To apply visit qld.gov.au/landtax.

Automatic partial relief for foreign entities

The Queensland Office of State Revenue (“OSR”) advises that there is no need to make an application for the foreign surcharge waiver –the OSR will reassess land tax to apply the waiver and provide a refund where the assessment amount has already been paid. On the face of it, there does not appear to be any requirement at this stage to “prove” COVID-19 impacts have affected the property owner.

Automatic 3 month deferral of payment of the 2020-2021 land tax assessments

It appears the deferral of payment of the assessment for the 2020-2021 land tax year will take place automatically as well with the OSR advising there is no need to make an application. Because there is no need to make an application it would seem that there is no requirement to establish COVID-19 impacts have affected the property owner.

Applications required for the 25% rebate of 2019-2020 land tax

The OSR advises that it will be necessary to make an application for the land tax 25% rebate for the 2019-20 assessment year. Eligible landlords must apply for the 25% rebate BEFORE 30 June 2020.

Commercial and residential landlords are eligible to apply for the 25% rebate for the 2019-2020 land tax assessment if either:

  1. The landlord leases all or part of a property to one or more tenants and all the following apply:

(a) the ability of one or more tenants to pay their normal rent is affected by the COVID-19 pandemic; and
(b) the landlord agrees to provide rent relief to the affected tenant(s) of an amount at least commensurate with the land tax relief; and
(c) the landlord agrees that it will comply with the leasing principles  (see below) even if the relevant lease is not regulated.

or

  1.  The affected landlord:

(a) has all or part of its property is available for lease; and
(b) the landlord’s ability to secure a tenant(s) has been affected by the COVID-19 pandemic; and
(c) the landlord requires relief to meet its financial obligations; and
(d) the landlord agrees to comply with the leasing principles even if the relevant lease is not regulated.

If a landlord is eligible for the land tax rebate under both the above circumstances (i.e. eligible landlords have some property leased and some property vacant), the OSR expects the landlord to apply the rebate paid firstly to provide rent relief to the landlord’s tenants. Landlords are then able to apply any remaining rebate to their own financial obligations (e.g. in relation to debt and other expenses).

The land tax rebate will only apply to each property that meets the above eligibility requirements and conditions, rather than the rebate applying to a property owner’s entire taxable landholdings.

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.

The OSR advises that the land tax rebate does not need to be repaid if the eligibility requirements and conditions are met.

Leasing Principles

To be eligible for the 25% land tax rebate a landowner must commit to comply with the leasing principles set out below. As there is no need to make an application for either the deferral of the 2020-2021 land tax payment or the waiver of the 2% foreign surcharge it is hard to see how the announced leasing principles can be intended to be a pre-requirement for those forms of land tax relief.

The leasing principles are to be introduced into Queensland law – this cannot happen until Parliament resumes sitting on 28 April 2020, so clarification on the grey areas may take some time!

The announced principles for residential landlords are:

  1. 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;
  2. 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;
  3. You will not end a tenancy for any reason other than on an approved ground; this does not include the tenant’s inability to pay rent or the end of a fixed term lease;
  4. You will not charge break lease fees for tenants who need to end a fixed term tenancy early due to the financial, health or personal safety impacts of COVID-19; and
  5. You will allow a tenant to refuse entry for non-essential reasons, including routine repairs and inspections, particularly if a member of the household has a higher risk profile if exposed to COVID-19.

The announced principles for commercial landlords are:

  1. 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;
  2. 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;
  3. You will not increase rent, except where rent is linked to increased turnover;
  4. You will not penalise a tenant who stops trading or reduces opening hours;
  5. You will not charge any interest on unpaid or deferred rent; and
  6. You will not make a claim on a bank guarantee or security deposit for non-payment of rent.

There has already been strong concerns raised by the property industry and the real estate sales industry about aspects of the announced principles. With enabling legislation still to be passed strong lobbying by these peak bodies can be expected.

Relief for Commercial and Residential Tenants

These announced measures are still subject to enabling legislation being introduced and passed by the Queensland Government. We will review the proposed legislation when it is introduced and comment at that time.

Questions?

For assistance with any questions you have about the announced Land Tax relief measures, please contact our Commercial Property Team.

Contact Information

Direct Line: 07 4616 9803