The NSW State Budget extends the land tax COVID-19 relief for landowners to 28 March 2021 in a modified form. The land tax relief is up to 50% of the land tax.
To be eligible for relief from 1 January 2021 to 28 March 2021:
- the lease must be a retail lease
- the annual turnover of the tenant must be less than $5 million
- the tenant needs to re-establish eligibility by demonstrating a 30% decline in turnover (15% for non-profits) for the December 2020 quarter.
Land tax places a large tax burden on a small number of taxpayers. If implemented, these proposed changes could give property buyers the freedom to choose either to pay stamp duty and land tax (where applicable) or to pay an annual property tax.
The property tax would consist of a fixed amount plus a rate applied to the unimproved land value of an individual property, and not aggregate landholdings. This is broadly in line with the approach to council rates.
Residential owner occupied and primary production properties would pay lower rates than investment properties, which in turn would pay lower rates than commercial properties.
Price thresholds would limit the number of properties initially eligible for transition to keep revenue and debt impacts within reasonable levels, while ensuring over 80 per cent of residential properties are eligible to opt-in from day one.
In the short term, the proposed model will reduce the NSW Government’s revenue. Over the longer term, the property tax would be revenue neutral, collecting the same amount of revenue as stamp duty and land tax.
Existing stamp duty concessions for first home buyers could be replaced with a grant of up to $25,000.
Full details are available on the government’s Service NSW website.