For those previously concerned about the impacts of the recent Land Tax Reforms, the COVID-19 crisis put those concerns aside whilst we all had to deal with something more serious. Now that the short-term effects of COVID-19 seem to be ending, the much anticipated Land Tax Reforms have commenced practical operation from the 1st July 2020.
Managing Land Tax Costs
Considering the long-term economic impact of COVID-19 will no doubt ripple for years, many individuals will look to minimise any additional financial impacts that eventuate from the pandemic.
For individuals or businesses that engage in property investment, now more so than ever Land Tax is at the top of the list of holding costs that one would wish to manage and minimise.
Unfortunately this is not easy, as the Land Tax Reforms are a complicated package of laws which seek to significantly change the manner in which Land Tax is assessed on investors holding multiple properties. The grave concern is obvious: will my Land Tax bill go up this year, and how much.
Whilst the new laws are now operating, there remains a number of consideration for owners of multiple property to consider in order to best manage their Land Tax.
Revenue SA Land Tax Letters
No doubt many of our members may have received letters from RevenueSA, prompting individuals to notify the Commissioner of State Taxation of their ownership structures.
These letters “request” action to be taken by a certain date in June 2020. It is important to note that action by these dates was merely a “request”, and is not mandatory.
The real date legislated for notification of ownership structures (in particular Trusts) is 31 July 2020.
For those property owners who are unsure as to how to complete their Revenue SA portal information, Commercial & Legal have been offering their service to help complete the portal requirements and provide ancillary information and advice.
Beneficiary Nominations for Trusts
Now until 31 July 2021 owners of property can make beneficiary nominations for properties owned by trusts.
Winners are sure to include those who plan ahead to understand the impact on their property portfolios and adapt to the changes. Planning ahead includes, but is not limited to:
- Understanding who to nominate given the limitations on retracting and replacing nominated beneficiaries; and
- The limitation in the number of beneficiaries to nominate, given that providing a nomination could see an individual’s interests being aggregated with other property ownerships.
There has also been succession planning issues raised in relation to beneficiary nominations, where beneficiaries of a trust feel an unequal preference, by a nomination being provided, for one over the other respective beneficiaries of that trust.
General Concessions for Land Tax
There will be certain concessions available to property owners and developers. Concessions are intended to be administered as an Ex Gratia Scheme, although they cannot be accessed prior to 1 July 2020. Concessions that are due to be available are:
- Affordable Housing Concession;
- Developer Concessions;
- Affordable Community Housing Land Tax Exemption Pilot Scheme; and
- The Land Tax Transitional Fund.
Other concessions available.
COVID-19 Land Tax Relief
There is Land Tax relief for non-residential and residential landlords in response to COVID-19.
Landlords who provide tenants, impacted by COVID-19 with rent relief, may be eligible for a 25% reduction on the Land Tax payable on a parcel of land in the 2019-20 Land Tax year.
Furthermore, third and fourth quarter Land Tax instalments can be differed and the land tax reform transitional relief will be increased from 50% to 100% of the land tax increase, in an eligible landowner’s 2020-21 land tax assessment.
REISA remains your leading industry body for the information you need to know and advocating for the political changes you want to see so that we protect our real estate community and its consumers.
Our legal partners, Commercial & Legal, are the leading property experts and equipped to provide the full range of Property Law services required by our members in both a commercial and residential capacity.
For any other questions or advice that you might need on these Land Tax Reforms, please continue to email Andrew Shields on email@example.com or contact either Elias Farah or Peter Dimtrious at Commercial & Legal on firstname.lastname@example.org or email@example.com.
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