Exemption: land used and occupied primarily for low cost accommodation – 2020 tax year

Preamble

1. Land that is situated within a 5 kilometre radius of 1 Martin Place, Sydney (the former Sydney GPO Building) and is used to provide low-cost rental accommodation in accordance with guidelines approved by the Treasurer is exempt from land tax.
2. If only part of the land is used to provide the low-cost rental accommodation, it may be entitled to a reduction in taxable value rather than a full exemption.
3. The purpose of this ruling is to outline the approved guidelines applying to the 2020 land tax year, 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.  This can be done online at www.revenue.nsw.gov.au.

Guidelines approved by the Treasurer

4. The guidelines under which land used to provide low cost accommodation is exempt from land tax for the 2020 land tax years             are as follows:

(i) 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 2020 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:

(a) each tenancy is subject to a Residential Tenancy Agreement under the Residential Tenancies Act 2010; and

(b) 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 2019; and

(c) the maximum weekly tariff¹ paid under a Residential Tenancy Agreement during this 6 month period was no more than the tariff limit specified in paragraph 4; and

(d) the owner gives an undertaking to pass on a benefit to the tenant(s), broadly equivalent to the value of the land tax exemption or reduction in taxable land value to the owner. The benefit may be passed on in one or more of the following forms:

1. reducing the tariff; or
2. forgoing an increase in tariff that would otherwise have occurred under the Residential Tenancy Agreement; or
3. carrying out work, improvements or renovations to the premises including work required to comply with Council regulations and fire safety regulations.

(ii) 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 director or shareholder of that company, or by a member of the family of a director or a shareholder of that company.

(iii) 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.

(iv) 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.

5. The maximum tariffs charged for the 6 month period of 1 July 2019 to 31 December 2019), excluding the Commonwealth’s GST, are:

   (i) $261 for one-bedroom accommodation; and

   (ii) $347 for two-bedroom accommodation; and

   (iii) $432 for three or more-bedroom accommodation

Ruling

5. 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 consist of 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.
6. Owners must apply for exemption by completing the standard declaration which should be lodged online at www.revenue.nsw.gov.au by 31 March 2020, or within 30 days after receiving a notice of assessment relating to the land.
7. 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.

Footnotes

1. Maximum tariff limits do not include GST