2021 Coronavirus Land Tax Relief

The Victorian Government has announced two land tax reliefs in relation to the 2021 Land Tax Relief, announced on 4 September 2020 and December 2020, for landlords (including landlords with multiple tenancies) and commercial owner-occupiers.

Land tax relief and deferral for landlords and commercial owner-occupiers

Applications already open: residential landlords, and landlords of properties with multiple tenancies (residential and/or commercial).

12 April 2021 (Monday) Applications will soon be open for commercial landlords with a single tenancy.

Applications for commercial owner-occupiers will be open on Monday 26 April 2021.

The deadline for this application is 30 June 2021.

25% reduction in land tax and tax deferral for eligible landlords

Landlords who offer rent relief to tenants affected by coronavirus between 1 January 2021 and 28 March 2021, in line with the principles of the Support to Landlords and Tenants program, will be eligible for a 2021 land tax on the property 25% reduction (excluding any absentee landlord surcharge).

These landlords can defer payment of the remainder of their 2021 land tax assessment (and the 2020 land tax previously deferred under the 2020 mitigation) until on or before 30 November 2021. They may also refund the amount of 2021 land tax already paid but must pay the 2021 land tax liability (after the reduction in land tax as a result of this mitigation measure) by 30 November 2021.

Qualifying residential arrangements residential arrangements include tenancy agreements, specialist disability accommodation agreements and site agreements. most holiday accommodation, such as hotels, motels and B&Bs, as well as rooms in guest houses, are not let under qualifying residential arrangements and therefore do not qualify for land tax relief.

To qualify for land tax relief, commercial landlords offering rent relief must follow the Commercial Tenancy Relief Scheme. to their landlord) that they qualify under either of the following two categories.

For a general commercial tenant:

Have a total annual turnover of no more than $50 million for the 2019-2020 or 2020-21 financial year, and.

They are eligible to receive and participate in the Australian Government’s JobKeeper grant in the March 2021 quarter.

For commercial tenants who hold a club or indoor liquor license to operate, licensed bar, club or restaurant.

has an annual turnover of no more than $50 million at the premises level for the 2019-2020 or 2020-21 financial year, and

The turnover of the premises has reduced by at least 30% in the December 2020 quarter relative to the March 2020 quarter.

We will not provide land tax relief if we determine that the rent relief offered by the landlord to the tenant is

Is not genuine and does not comply with the principles of the Supporting Landlords and Tenants program or the Business Rent Relief Scheme, or

if the amount of rent exempted between 1 January 2021 and 28 March 2021 is less than 25% of the property’s land tax percentage.

Land tax relief for properties with multiple tenancies

Owners of properties with multiple tenancies can claim land tax relief for 2021 for the whole property, not just for the part of the property occupied by the qualifying tenant who has been granted rent relief.

Owners of properties with multiple tenancies can claim land tax relief through our Coronavirus land tax relief – Multiple tenancy properties Smart Form. You will also need to download and complete a ‘Multiple Tenancy Schedule’ to submit with your application.

You cannot claim land tax relief for multi-tenancy properties through My Land Tax.

Land tax relief of 25% and deferred tax for owner-occupiers

An owner-occupier of a commercial property can receive a 25% exemption from 2021 Land Tax on that property and defer payment of the remaining 2021 Land Tax (and the 2020 Land Tax previously deferred under Measure 2020) until 30 November 2021. requiring their business to qualify under either of the following two categories.

For general business tenants.

have a total annual turnover of no more than $50 million in the 2019-2020 or 2020-21 financial year, and

be eligible to receive and participate in the Australian Government’s JobKeeper grant in the March 2021 quarter.

For commercial tenants who hold a club or indoor liquor license to operate, licensed bar, club or restaurant.

has an annual turnover of no more than $50 million in the premises for the 2019-2020 or 2020-21 financial year, and

the turnover of the premises has reduced by at least 30% in the December 2020 quarter relative to the March 2020 quarter.

Foreword

The Victorian Jobs Fund is providing $250 million in wage subsidies to help Victorian businesses employ at least 10,000 people who are looking for work. The Fund will support employer growth and recovery while helping Victorians looking for work to find stable employment.

If you are a Victorian employer ready to take on new staff, the Victorian Jobs Fund can provide you with financial support to help you employ the people most affected by the epidemic economy.

Subsidy details

Employers can apply to the Jobs Victoria Fund for a 12-month wage subsidy to cover the cost of hiring a new eligible employee.

There are two levels of wage subsidies. Tier 1 Wage Subsidy is available up to $20,000 per employee and Tier 2 Wage Subsidy is available up to $10,000 per employee (all wage subsidies are exclusive of GST).

The amount of wage subsidy available depends on each employee and whether the job is full time or part time (see below).

If an employee fits into more than one group at the same time, only the higher wage subsidy applies.

Employers claiming wage subsidies for more than three employees must offer women at least 60% of the subsidised position.

Tier 1 wage subsidy

(For every 1 unit of full-time manpower FTE, the subsidy is A$20,000)

Employers employing the following groups of people are eligible for a maximum subsidy of A$20,000

– Women over 45 years of age

– Long-term unemployed (unemployed for more than six months)

– Job seekers registered with ” Jobs Victoria Partner”.

– Aboriginal and/or Torres Strait Islander people

– People with disabilities

– Asylum seekers/refugees

– Newcomers from non-English speaking backgrounds.

Tier 2 wage subsidy

(For every 1 unit of full-time manpower FTE, the subsidy is A$10,000)

Up to A$10,000 is available to employers employing

– Young people under the age of 25

– People over 45 years of age

– Veterans

– Those previously employed under the Working for Victoria initiative

Full-time or part-time employment

Benefits are prorated according to whether the work in question is full-time or part-time.

– Full-time is 38 hours per week

– Part-time must be a minimum of 19 hours per week.

Employer requirements

Must be the employee’s direct employer (i.e. an agent cannot represent the employer)

Must hold a WorkCover from the time the employee was employed.

Must be operating in Victoria and be registered with ABN (and ACN).

For private businesses, sole traders, social enterprises and/or Aboriginal businesses, the applicant must have paid less than $20 million in salary in the financial year prior to the date of application.

Charitable and not-for-profit organisations must be registered with the Australian Charities and Not-for-Profit Commission (ACNC).

Employers who do not meet the requirements

1. Victorian Public Service and Victorian Public Sector b. Australian Public Service and Federal Public Sector

Employee requirements

New employees must start working for an eligible employer on or after 16 March 2021.

At the time of application, the employee must have been employed by the qualifying employer for no more than 12 weeks.

The employee must be unemployed or underemployed* (*”underemployed” is defined as working no more than 16 hours per fortnight) at the time of commencing work for the employer. Unless the employee has previously been employed.

Worked under the Working for Victoria initiative scheme; or

has worked no more than 16 hours per fortnight and has transitioned to permanent or regular work of at least 19 hours per week.

The employee must meet the following residency status.

Resident of Victoria

entitled to work for the applicant as: an Australian citizen; a person who holds an Australian permanent residence visa with the right to work; a person who holds an Australian temporary work visa; a person who holds a student visa and is enrolled in a qualifying course in Australia; or a person who holds an Australian refugee and humanitarian visa with the right to work.

The employee consent form must be completed and signed by each eligible employee and forms part of the application.

Employment requirements

Duration of employment

Employment must be for a period of 12 months or more.

Number of jobs

Applicants may apply for this grant to increase the number of existing employees by up to 20%. For example, if an applicant employs 60 full-time equivalent employees (excluding eligible employees), they can apply for a wage subsidy for up to 12 full-time employees. Each eligible employer can receive a maximum of 20 full-time employees.

Type of employment

All jobs must be permanent or fixed-term positions (i.e. full-time or part-time) with a minimum of 19 hours of work per week.

Wages and entitlements

Employers must offer at least the statutory minimum wage and entitlements.

Replacement of existing employees

No replacement of existing employees (i.e. must not result in any existing employee being dismissed or working reduced hours).

Work that does not meet the requirements

– Temporary workers

– Permanent or fixed term employment where the working hours are less than 19 hours per week.

– Fixed-term employment, such as short-term employment (e.g. weekly employment)

– Jobs offering a full time salary or an annual salary in excess of $120,000 (excluding pensions)

Benefit payment cycle

Tier 1 Wage Supplement         Tier 2 Wage Supplement

Paid directly to eligible employers in three parts.

– On submission of initial payslip: $6,000 is paid.

– 26 weeks after date of employment (or 26 weeks from the most recent date of employment if there is more than one employee): a second payment of $6,000

– 52 weeks after date of employment (or 52 weeks from the most recent date of employment if more than one employee is employed): a final payment of A$8,000.

Paid directly to the eligible employer in three parts.

– On submission of initial payslip: A$3,000.

– 26 weeks after date of employment (or 26 weeks from the most recent date of employment if there is more than one employee): second payment of A$3,000

– 52 weeks after date of employment (or 52 weeks from the most recent date of employment if more than one employee is employed): a final payment of A$4,000.

Apply for this benefit

The Jobs Victoria Fund is open for applications from 26 February 2021. Eligible employers can apply for funding through the online application form on the Jobs Victoria website: https://businessvic.secure.force.com/PublicForm?id=jvofr1-2021#no-back-button

To conclude

If you have any questions or need assistance, please contact Zero2one and we will do our best to help you.

Previous Foreword

Under the Main Residence Exemption, Australian taxpayers whose property is or has been their ‘main residence’ are exempt from Capital Gain Tax (CGT) if they meet certain criteria. They are exempt from Capital Gain Tax (CGT) if they meet certain criteria. These long-standing rules mean that capital gains associated with a qualifying main residence (main residence) are generally exempt from Australian CGT; and the exemption applies permanently to properties that have never been rented out and for a further six years from the time the property is rented out – this is known as the ‘six-year rule”.

This exemption only applies if no other property is designated as the principal residence and the six-year exemption ‘resets’ when the property is re-used as the principal residence.

The principal residence exemption does not apply to foreign residents from 1 July 2020

On Wednesday 23 October 2019, the Australian Assistant Treasurer reintroduced legislation that had previously lapsed.

“Removes the entitlement of foreign residents to the CGT principal residence exemption, except for certain real-life events that occur during a person’s time as a foreign resident, which is six years or less.”

The proposed changes to the previously defunct legislation will come into effect on 1 July 2019, with the new legislation having a later effective date of 1 July 2020, with the above definition of “foreign residents’ foreign residents” including, Australian citizens and permanent residents who reside outside Australia as well as non-tax residents of Australia for tax purposes.

The bill passed the House of Representatives on Wednesday 27 November 2019 and received Royal Assent into law on 12 December 2019. As a member of the Australian Tax Institute, the Australian tax association, said, “there is no legitimate policy reason to deny Australian citizens the CGT main residence exemption in these circumstances”. It is also inevitable that many foreign residents will sell their properties unaware of these changes, with significant financial implications, while foreign residents who are in Australia for a short period of time retain the opportunity to obtain the exemption.

The original draft legislation was aimed primarily at foreign investors in Australian property, and although later amendments removed temporary residents from the scope of the legislation, the LNP Liberal National Coalition government – with less than enthusiastic support from Labor – doggedly pursued the legislation, fully know that it is Australian citizens and permanent residents permanently residing overseas on a long-term basis, not ‘foreign investors’, who will be most affected.

Given the long delays and disruptions inherent in this legislation, many foreign residents hoped that it would simply go away as they were reluctant to sell their family properties in Australia. However, when it became clear that the legislation would apply from 1 July 2020, many had only 6-9 months to sell their Australian property to avoid a very significant tax loss afterwards. But with the Covid 19 epidemic stepping in and bringing the world and the Australian property market to a virtual standstill, it was almost a ‘complete storm’ for many foreign residents.

It was a non-essential, discriminatory piece of legislation, and apparently the government felt that foreign residents could be ignored because they were ‘disenfranchised’ from a voting point of view. Australian expatriate groups around the world should adopt an approach to government representatives when seeking assistance in the future; it is hoped that “missions” against such bills will always resume once the Covid 19 outbreak has subsided.

Summary of legislation

The Bill is accompanied by an explanatory memorandum which summarizes below some of the key features and implications of the proposed legislation and notes that they may have a significant impact on Australia’s heritage if the deceased was a non-resident, or if the beneficiary was a non-resident.

Current law, applicable from 1 July 2020 Past law

Main residence exemption: Individuals

Generally, individuals who are foreign residents at the time of a CGT event in a residence (or, in the case of compulsory acquisition, part of a residence) in which they have an ownership interest are not entitled to the CGT main residence exemption.

However, an individual who has been resident in a foreign country for six years or less may be entitled to the CGT principal residence exemption if certain ‘life events’ occur during that foreign residence.

An individual who is a resident of a foreign country is entitled to the same CGT main residence exemption as an individual who is an Australian resident.

Main residence exemption: Deceased is foreign resident at time of death

Main residence exemption, where the individual is a foreign resident at the time of death

A trustee of a deceased estate who was an excluded foreign resident at the time of death is not entitled to the CGT main residence exemption in respect of the ownership interest in the deceased individual’s home.

A beneficiary of a deceased estate who was an excluded foreign resident at the time of death is not entitled to the CGT main residence exemption in respect of an ownership interest in a deceased personal residence.

The trustee of a deceased estate is entitled to the CGT main residence exemption in respect of an ownership interest in a residence in which the deceased individual was a foreign resident at the time of death, in the same manner as if the deceased individual had been resident at that time.

Main residence exemption: Beneficiary of deceased estate is a foreign resident

Main residence exemption: Beneficiary of deceased estate is a foreign resident

The beneficiary of a deceased estate is entitled to the main residence exemption component of CGT in relation to the deceased individual’s ownership interest in the residence, provided that the deceased was not an excluded foreign resident at the time of death. This applies even if the beneficiary was a foreign resident at the time of CGT on the residence.

However, if the beneficiaries were foreign residents at the time of CGT on the residence, then they are not entitled to any additional part of the main residence exemption to which they would otherwise be entitled in their own right.

A beneficiary of a deceased estate is entitled to the CGT principal residence exemption in respect of an ownership interest in a deceased individual’s residence, provided that the beneficiary was a foreign resident and taxed in the same way as an Australian resident.

The following is a summary of the main aspects of the legislation that

An individual who sells their principal residence will not be entitled to the principal residence exemption if they are foreign residents at the time of disposal – this includes non-resident Australian citizens or permanent residents living overseas.

For individuals, the date of disposal of the proceeds of their property is usually when the contract of sale is entered into.

The Act does not provide for any ‘allocation’ of the principal residence exemption. Any days that the property was owned as an Australian resident do not need to be included in the calculation of CGT.

The new legislation provides that foreign residents – who satisfy the ‘life events test’ (unless they have been a foreign resident for more than six years) – can be granted the CGT primary residence exemption – for events such as terminal illness, death and divorce. death and divorce.