The Victorian Government has released preliminary details about its plan to grant land tax relief to landlords due to the COVID-19/Coronavirus pandemic. The Government has not yet published the proposed legislation to enact this relief and the information contained in this article is based upon the initial media release from the Premier and a brief publication from the State Revenue Office.
The legislation enacting these measures is expected to be introduced to the Victorian Parliament this Thursday, 23 April 2020.
The measures discussed below apply across both commercial and residential tenancies.
Land Tax Reductions
As per the currently available information, landlords that provide rent reductions to tenants who have been impacted by COVID-19 may be eligible for a 25% reduction on the property’s 2020 land tax assessment. The same 25% reduction will also be available to landlords who are unable to secure a tenant because of COVID-19.
There are two major areas in the announcement that will require further clarification.
The first of these is a definition of what it means for a tenant to be ‘impacted by COVID-19’ and the degree to which they will need to be impacted for a landlord to be eligible for land tax relief. Similarly, it is unclear how the state government proposes to determine that a landlord’s inability to secure a tenant for their property is due to COVID-19. Both of these will impact how many landlords will be covered by the scope of this legislation.
The second area requiring clarification surrounds the eligibility of landlord’s for the relief. The State Revenue Office announcement only notes that those landlords providing relief to affected tenants ‘may be eligible for a 25% reduction on the property’s 2020 land tax.’ This implies some further scrutiny or requirements will be put in place before the land tax relief will be made available to landlords. By way of contrast, the media release by the Premier indicates that landlords ‘will be eligible for a 25% discount on their land tax’ if they provide rent relief, highlighting the uncertainty as to what precise measures will be implemented.
Land Tax Deferrals
Landlords will also have the option to defer the remainder of their 2020 land tax assessment to 31 March 2021 if they grant rent relief to their tenant. It is not clear from the currently available information if the option to defer will also apply to those landlords who are unable to secure tenants due to COVID-19.
Further clarity will be available once the proposed legislation is introduced to parliament.
If you have queries in relation to any of the issues discussed in this article or any leasing inquiries, please do not hesitate to contact Eastern Bridge.