Applications for 2021 land tax relief in all categories — residential landlords, commercial landlords and commercial owner-occupiers — close at 10pm on Wednesday 30 June 2021.
How does it work?
Two relief measures relating to 2021 land tax have been announced by the Victorian Government:
A. 25% Land tax reduction and deferral for landlords, and
B. Vacant residential land tax waiver for 2021.
A. 25% LAND TAX REDUCTION and DEFERRAL FOR LANDLORDS
Applications are now open for residential and commercial landlords, and commercial owner-occupiers, and landlords of properties with multiple tenancies (residential and/or commercial).
During the pandemic landlords and tenants were encouraged to work together to provide tenants impacted by the coronavirus pandemic with some relief. Common measures include offering rent abatement and deferrals of rent, after taking into account the tenant’s reduction in income as a result of coronavirus. Other measures include introducing a temporary ban on evictions, pausing rental increases for six months, and providing land tax relief for landlords and rent relief for tenants experiencing financial hardship as part of a plan to help Victorian families and businesses get to the other side of this unprecedented crisis.
25% Reduction in Land Tax
Landlords who provide tenants impacted by coronavirus with rent relief between 1 January 2021 and 28 March 2021 may be eligible for a 25% reduction on the property’s 2021 land tax.
Defer remaining 2021 Land Tax
These landlords can defer paying the remainder of their 2021 land tax assessment (and any 2020 land tax previously deferred under the 2020 relief measures) until, or before, 30 November 2021.
Refund of Land Tax already paid
They can also have any amounts of their 2021 land tax liability that they have already paid returned but must pay their 2021 land tax liability (as reduced by this relief measure) by 30 November 2021.
No Rent Relief
The SRO will not provide land tax relief if they determine that the rent relief provided by a landlord to a tenant is:
not genuine and is not consistent with the principles of the various rent relief schemes, or
if the amount of rent waived between 1 January 2021 and 28 March 2021 is less than 25% of the proportional land tax for the property.
If you run a business from my property that has been impacted by the coronavirus pandemic, you are eligible for land tax relief, if you own the property from which you actively carry on your business under an ABN. You must own the property and the business, either directly or through a company or trust that you own and control. Your business must meet the conditions that:
Your annual aggregated turnover is less than $50 million and
You are eligible for, and participating in, the JobKeeper program in the March 2021 quarter.
Apply again for 2021
If you have already received a 25% reduction on your 2020 land tax and you think that you are eligible for a 25% reduction on my 2021 land tax, you need to apply again separately for 2021 land tax relief.
If you previously received 2020 land tax relief, with your 2020 land tax deferred until 31 March 2021, you can now apply for 2021 land tax relief and have your 2020 land tax further deferred until 30 November 2021.
You cannot defer your 2021 land tax in full if you are not providing rent relief.
When the tenant pays the Land Tax
If your tenant is contractually obligated to pay the land tax on the property, you are required to pass on to the tenant their proportionate share of the land tax reduction.
2021 land tax relief is not available for untenanted properties.
To be eligible for tax relief for a tenanted property, you must demonstrate that:
Your property has been rented since before 31 December 2020, and
You have provided rent relief to at least one of your tenants in accordance with this relief measure.
Property under development
Properties being held or developed for the purpose of sale are not eligible for relief unless there is a business being actively conducted on the property. Construction or development work on the property does not qualify as a business being actively conducted on the property.
B. VACANT RESIDENTIAL LAND TAX - WAIVER FOR 2021
On 10 September 2020, the Victorian Government announced a full waiver of 2021 vacant residential land tax liabilities, which would ordinarily apply to residential properties in Melbourne’s inner and middle suburbs, that were vacant for more than six months in 2020.
This recognises the impact that the coronavirus pandemic has had on occupancy of rental properties where many properties that would otherwise be occupied are vacant.
At May Klye & Associates, we specialise in dealing with the accounting and tax aspects affecting property investors, be they residential or commercial. We have well over a hundred property investor clients, and we have extensive experience in getting them the best tax outcome. If you would like to know more, call Noel or Amanda on 03 9585 7555 or email us at email@example.com