Where land is situated within a 5 kilometre radius of 1 Martin Place, Sydney (the former Sydney GPO Building) and is used to provide rental accommodation, the land is exempt from land tax, or is entitled to a reduction in the taxable value of the land if the land is used and occupied primarily for low-cost accommodation in accordance with the following guidelines approved by the Treasurer.
The purpose of this ruling is to outline the approved guidelines applying, and to explain the conditions that entitle the owner to claim an exemption or a reduction in the taxable land value. A declaration must be completed each year by owners who wish to claim the concession. The form is published on Revenue NSW’s website at www.revenue.nsw.gov.au.
Guidelines approved by the Treasurer
The guidelines under which land used to provide low cost accommodation is exempt from land tax for the 2018 and subsequent land tax years are as follows:
Owners of land who provide low cost accommodation (not being licensed premises or a boarding-house) are entitled to an exemption from land tax or a reduction in the taxable value of the land for a specific land tax year (called the “relevant tax year”) if the premises are used or partly used to provide low cost accommodation and the land is situated within a 5 kilometre radius of 1 Martin Place, Sydney (the former Sydney GPO Building) and:
the tenant used and occupied the residential premises or part of the premises for residential purposes and for no other purpose for the 6 months ending on 31 December immediately preceding the relevant tax year (called the “prior 6 months”); and
the maximum weekly tariff1 paid under a Residential Tenancy Agreement during the prior 6 months was no more than the tariff limit for the relevant tax year specified or calculated in accordance with paragraphs 5 and 6; 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 taxable 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 any of the persons using and occupying the land was a member of the family of the owner; or if the land is owned by a company, by a member of the family of a director or a shareholder of that company.
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 under the Succession Act 2006 to an inheritance should the owner, director or shareholder die intestate.
The concession still applies if there were circumstances beyond the owner’s control which prevented the premises being used and occupied by a tenant for any part of the prior 6 months.
The tariff limits applying for the 2018 land tax year (that is, the maximum tariffs that may be charged for the 6 month period of 1 July 2017 to 31 December 2017), excluding the Commonwealth’s GST, are:
$249 for one bedroom accommodation; and
$331 for two bedroom accommodation; and
$413 for three or more bedroom accommodation.
The tariff limits applying for a relevant tax year after 2018 are the tariff limits applying for the previous land tax year adjusted by the estimated change in the Sydney all groups CPI for the financial year commencing on 1 July of that previous year, as published in that previous year in the annual State Budget.
Tariff limits for land tax years subsequent to the 2018 land tax year will be published by the Chief Commissioner of State Revenue annually on the Revenue NSW website by the 31 December immediately preceding the relevant tax year.
If only part of the land or premises is used for low cost accommodation, a pro rata reduction in the land value of the land will be calculated in accordance with section 10R (3) – (3C) of the Land Tax Management Act 1956. If the premises is 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 by 31 March 2017 or within 30 days after receiving a notice of assessment relating to the land. The declaration may be posted to the Chief Commissioner at the following add:
Records of owners who claim concessions are regularly audited by Revenue NSW. Documentary evidence supporting the information in the declaration must be retained and produced for inspection, if requested.