Where land situated within certain boundaries is used and occupied primarily for low-cost accommodation (other than as a boarding house) an exemption from land tax is available if guidelines approved by the Treasurer are met. Where only part of the land or premises is used to provide the accommodation, an exemption is not available but the owner is entitled to claim a reduction in the land value of the land.
The purpose of this ruling is to explain the approved guidelines applying for the 2015 tax year, to explain the conditions that entitle the owner to claim an exemption or a reduction in the land value and to provide a declaration to be completed by owners who claim the concession. An explanation of the guidelines approved by the Treasurer for the 2015 tax year for boarding-houses is contained in a separate Land Tax Revenue Ruling.
Guidelines approved by the Treasurer
The guidelines under which land used to provide low cost accommodation is exempt from land tax for the 2015 tax year are as follows:
Owners of land who provide low cost accommodation (not being licensed premises or a boarding-house) will be entitled to claim exemption from land tax or a reduction in the taxable land value of the land (if the premises are partly used to provide low cost accommodation) if the land is situated within a 5 kilometre radius of the Sydney GPO Building, corner of Martin Place and Pitt Street, Sydney where:
the maximum weekly tariff paid under a Residential Tenancy Agreement during the 6 months ended 31 December 2014 was no more than:
$232 for one bedroom accommodation; or
$309 for two bedroom accommodation; or
$386 for three or more bedroom accommodation; and
the tenant used and occupied the premises or part of the premises for residential purposes and no other purpose for the 6 months immediately preceding 31 December 2014; and
the owner gives an undertaking to pass on a benefit to the tenant(s) broadly equivalent to the value to the owner of the land tax exemption or reduction in land value. The benefit may be passed on in one or more of the following forms:
reducing the tariff; or
foregoing an increase in tariff that would otherwise have occurred under the Residential Tenancy Agreement; or
carrying out work, improvements or renovations to the premises including work required to comply with Council regulations and fire safety regulations.
An exemption or a reduction in the taxable land value is not applicable where the use and occupation of the land was by any member of the family of the owner or where the land is owned by a company, by a member of the family of a director or a shareholder of that company;
The concession applies if there were circumstances preventing the premises being used and occupied by a tenant for any part of the 6 months prior to the taxing date, which were beyond the owner's control; and
For the purposes of paragraph (ii) above, a member of the family of the owner or a member of the family of a director or a shareholder means a person who could possibly be entitled in terms of the Succession Act 2006 to an inheritance should the owner, director or shareholder die intestate.
*Tariff rates do not include GST
If only part of the land or premises was used for low cost accommodation, a pro rata reduction in the land value of the land will be calculated. If the premises are a single building, the reduction in land value is to be made on a floor area basis. Otherwise the reduction is to be made using the ratio of the land area used and occupied for low cost accommodation to the total area of the land.
Owners must apply for exemption by completing the standard declaration which should be lodged as soon as possible but within 30 days after receiving a notice of assessment which includes the land. The declaration may be posted to the Chief Commissioner at the following address:
Office of State Revenue Client Services GPO Box 4042 Sydney NSW 2001
or, alternatively may be lodged at any branch of the Office of State Revenue from where additional copies of the declaration are available.
Records of owners who claim concessions are regularly audited by the Office of State Revenue. Documentary evidence supporting the information in the declaration must be retained and produced for inspection, if requested.