The New South Wales Government is in the process of responding to and implementing the Federal Government’s National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles (Commercial Leasing Code). As part of this process, the following measures have been announced.

Land tax refund

Revenue NSW has announced a land tax reduction of up to 25% for commercial landlords in the following circumstances:

• For properties that are leased to a tenant or tenants who qualify for the Leasing Code. That is, tenants with annual revenue of less than AU$50 million and suffering at least 30% reduction in revenue due to COVID-19.
• The landlord has reduced the tenant(s) rent by at least the amount of the land tax reduction claimed
• The landlord has paid the land tax for the year in full

The reduction can be claimed by way of a refund. The reduction applies on a property by property basis and is capped at 25% of the landlord’s total land tax for 2020.

Revenue NSW has stated that landlords will be required to provide supporting documentation such as business activity statements or a letter from an accountant to prove that their tenant is in financial distress, as well as evidence of the rent reduction. Examples of the type of evidence may include copies of old and new lease agreements.

Revenue NSW is currently streamlining the application process and working out what information and documents will be required.

Further information can be obtained from Revenue NSW at: http://www.revenue.nsw.gov.au/news-media-releases/covid-19-tax-relief-measures/covid-19-coronavirus-and-land-tax.

Parking space levy deferral

Revenue NSW has also announced that payment of the parking space levy is deferred until 30 September 2020. As a result, the due date for payment of the last quarter outstanding balance for the 2019-20 levy year has been extended from 1 June to 30 September.

Further information can be obtained from Revenue NSW at: http://www.revenue.nsw.gov.au/news-media-releases/covid-19-tax-relief-measures.

Council rates deferral and reduction

The Local Government (General) Amendment (COVID-19) Regulation 2020 was passed on 17 April 2020, granting councils the power to give rates relief by:

• Deferring the first instalment of 2020-2021 rates by one month to 30 September 2020
• Waiving or reducing rates for businesses experiencing significantly reduced income due to COVID-19

The rates relief measures are not compulsory. Each council may decide whether to implement these measures, based on that council’s particular circumstances.

Contact your local council for further information.

Commercial Leasing Code and Commercial Leasing Regulation

The Commercial Leasing Code was enacted in New South Wales on 24 April 2020 via the Retail and Other Commercial Leases (COVID-19) Regulation 2020 (Commercial Leasing Regulation).

The Commercial Leasing Code states that landlords must pass onto tenants any reduction in statutory outgoings (such as land tax and council rates) (Leasing Principle 6). This is reflected in clause 6(4) of the Commercial Leasing Regulation which provides that tenants are not required to pay landlords land tax or other statutory charges (such as council rates) to the extent of the reduction. Accordingly, landlords are required to pass onto their tenants who contribute to statutory outgoings under the lease any reductions they receive.

For further information or to discuss, please contact us.