08/09/2020 | Rob Lucas MLC | Lower Costs

A land tax relief scheme which supports landlords provide significant rent reductions for their residential and commercial SME tenants impacted by COVID-19 restrictions will be significantly expanded and extended by 6 months, to the end of April next year.

Under the State Government scheme, eligible landlords now can receive up to a 50% reduction on their 2019-20 land tax liability on affected properties (up from 25%) – provided they pass on the full benefit^ in land tax relief to their impacted tenants.

And the land tax relief measure will also be extended to include eligible commercial owner-occupiers#.

Impacted tenants may include, for example, gyms, clothing retailers, medical and dental practices, motels and hotels, restaurants, cafes, beauty salons and hairdressers.

Treasurer Rob Lucas said the Government wanted to ensure as many local landlords as possible were able to be supported, with more than 1,500 applications for relief to date.

“This initiative – part of our $2 billion in economic stimulus - is an important support for local businesses and residential tenants who have suffered a significant downturn in trade and income as a result of COVID-19,” said Mr Lucas.

“By helping landlords, we support their tenants – and, in turn, ensure we sustain as many local jobs as possible throughout the greatest economic challenge of our time.

“Rent can be one of the biggest fixed costs for a small business or residential tenant and this scheme complements the work of many landlords who have been working with their tenants and financial institutions to find an effective way through this period.

“Not only are we doubling the land tax relief available to eligible landlords to support their tenants, we are increasing the number of landlords who can access this scheme.”

Meanwhile, protections for commercial SME tenants impacted by COVID-19 restrictions will be extended by a further 3 months, under Marshall Government changes that will continue to back business and support local jobs.

Existing regulations under the COVID-19 Emergency Response Amendment Act – which covered the six months from March 30 – were due to expire on September 30 this year. They will be extended to January 3, 2021.

“These provisions continue to implement key elements of the National Mandatory Code of Conduct and seek to strike a necessary balance between the interests of both landlords and their commercial SME tenants affected by COVID-19, to ensure they have every opportunity to continue to trade,” said Mr Lucas.

“They ensure no affected commercial SME tenant can be evicted for non-payment of rent or outgoings, or for reducing their hours of business during this period.”

While landlords and tenants are required to negotiate leasing arrangements in good faith, where there is a dispute, a party may seek mediation by the Small Business Commissioner. If this fails, the matter may then proceed to the Magistrates Court for a determination.

Among other key elements of the regulations:

  • Landlords should negotiate with affected* tenants rent relief, on a case by case basis, having regard to the economic impacts of the pandemic on both parties;
  • A landlord must not increase an affected SME commercial tenant’s rent during this period, unless otherwise agreed to by the parties;
  • If a landlord receives land tax relief under the Government’s emergency land tax relief scheme, then they must pass on the full benefit of that relief to their affected tenant;
  • The Magistrates Court has broad powers to resolve a dispute, including making an order granting rent relief to the affected tenant, extending a tenant’s lease for the period which rent is deferred; as well as modifying the terms and conditions of a lease.

Mr Lucas said there is a facility to extend the regulations further to 28 March 2021, if required.

Applications for the land tax relief scheme will be available via www.revenuesa.sa.gov.au/ltcovid19relief

^Landlords who provide rent relief to eligible affected* tenants, or are unable to secure a tenant due to COVID-19, in the relevant period 31 October 2020 to 30 April 2021, can receive up to a further 25% relief on their 2019-20 land tax liability on the relevant parcel of land. To be eligible for the full value of relief, the rent relief provided to eligible tenants or rent forgone from an untenanted property must be equal to or greater than the value of the land tax relief. This is additional to the existing 25% relief available on 2019-20 land tax liabilities based on rent relief provided to eligible affected tenants or rent forgone over the period 30 March 2020 to 30 October 2020.

#Commercial owner-occupiers who own the land where they operate their business will be eligible to receive relief of 25% of their 2019-20 land tax liabilities where they are eligible for the Federal Government’s JobKeeper payment from 31 October 2020, and have annual turnover of not more than $50 million.

*Affected tenants are tenants eligible for the Federal Government’s JobKeeper payment with an annual turnover of not more that $50 million.