Last week the Western Australian state government announced a proposed package of stimulus and relief for the property and construction industries.
The package includes $100 million of land tax relief grants to be paid to commercial landlords who are freezing outgoings and providing at least three month’s rent relief to their tenants whose business has been impacted from COVID-19.
The relief will be equivalent to 25 per cent on the land tax bill for a property where the landlord can demonstrate they have fully waived a small business tenant’s rent and have frozen outgoings for a minimum of three months starting 1 March 2020.
Eligibility requirements as at 5 May 2020 published by the government are as follows:
- If you did not own a relevant property as at 30 June 2019, and therefore did not receive a Land Tax Notice of Assessment, you may still be eligible to apply for the grant.
- One or more of your tenants are a small business (As defined by the Small Business Development Corporation Act 1983)?
What is a small business? Your small business tenant(s) has suffered a 30 per cent drop in turnover due to the impact of COVID-19 (as defined by the Australia Taxation Office’s test) and have they confirmed this to you in writing.
- You have, or will have, fully waived your tenant’s rent for three months (or equivalent up to a 6 month waiver period) starting from the 1 March 2020, or from a date thereafter (but before 31 August 2020)
- You have agreed not to increase your tenant's outgoing charges for a period of six months or more, starting from the same date as you agreed to waive your tenant's rent
- You have agreed to not seek to recover the rent waiver and hold on the cost of outgoings (in whole or in part) from your tenant(s) at the end of the waiver period.
Small business tenants must have had a 30 per cent or greater reduction in turnover for a landlord to be eligible for this relief. Landlords must also agree to not seek to recover this rent relief from tenants at the end of the period.
The process of application is quite involved and we recommend making a start on this as soon as possible to ensure your application is placed in time to take advantage of this relief. If you require advice, we recommend you seek assistance from your accountant.
Applications will be open to commercial landlords from Friday 1 May 2020, through the Small Business Development Corporation. For more information on eligibility criteria and how to apply, visit www.smallbusiness.wa.gov.au
Treasurer Mr Wyatt noted "Grants will be available on a first come, first served basis to encourage landlords to negotiate early with tenants who are doing it tough as a result of COVID-19.
"We've opted to provide targeted assistance that supports both tenants and landlords of commercial and residential properties. “
The State Government’s media release on the scheme can be viewed Ministerial statement here.
The State Government has also provided taxpayers whose financial circumstances are directly or indirectly impacted by COVID-19 the ability to apply for late payment penalty tax to be remitted and to enter an interest-free payment arrangement. Refer Circular 20 issued by the Department of Finance for more information
The Land Tax Assistance for Landlords program helps compensate landlords who support small business tenants who have been financially affected by the Coronavirus pandemic. Read the FAQs for this program here
Here at Realmark, we’ve implemented procedures such as our rent relief application form, which helps our landlords to make informed decisions when it comes to their tenant’s capacity to pay rent, and when it may be appropriate to provide relief. This will also assist you in reviewing your eligibility as a landlord to claim land tax relief/apply for government grants that may be available to you from the government. Our goal is to work with you to reach the best solution for your investment and unique needs.
*the above is general information and you should consider your specific circumstances and obtain professional advice before making any decision.