The Victorian Government has announced a new support package which includes further tax relief measures.
They comprise a stamp duty discount for transfers of commercial and industrial property in regional Victoria, further payroll tax deferrals, a waiver of the 2021 Vacant Residential Land Tax, and further waivers and deferrals of the Congestion Levy and liquor licensing fees.
Victorian businesses, owners of vacant properties in Melbourne’s inner and middle suburbs and owners of carparks in the congestion levy areas stand to benefit from these new relief measures. They follow the Government’s announcement on 20 August of further land tax relief for landlords and eligible owner-occupiers.
What are the further tax relief measures?
Businesses with payrolls of up to $10 million will have their payroll tax deferred for the full 2020-21 financial year. This measure is an expansion of the previously announced payroll tax deferral for the first half of the 2020-21 financial year.
This measure will provide a much-needed cash flow boost for businesses. However, for many businesses struggling to stay afloat during the Stage 4 lockdown, a mere deferral rather than a refund of payroll tax (as was previously provided to businesses with payrolls of up to $3 million for the 2019-20 financial year) falls short of a lifeline and may not be enough to keep the doors open.
Vacant residential land tax (VRLT)
All owners of properties in Melbourne’s inner and middle suburbs that are vacant for more than six months in 2020 will have the 2021 VRLT payable on the properties waived.
We have been concerned for some time about the imposition of the VRLT on properties that would have otherwise been occupied in 2020 if not for the travel restrictions and various other circumstances caused by COVID-19 that have led to increased vacancy rates. The government has now recognised these concerns by waiving any VRLT payable in 2021, which is estimated to save property owners a combined $6 million.
The VRLT waiver follows the announcement on 4 September that eligible residential landlords may receive a 25% reduction in their 2021 land tax bill and can defer the remainder (plus any deferred land tax from 2020) until 30 November 2021.
While the various land tax and VRLT relief measures are welcomed, we call on the Government and the State Revenue Office of Victoria to ensure that the application process for relief is simplified so that the intended recipients can receive the relief promptly without being burdened with an overly cumbersome application process.
Pitcher Partners like to see the delivery of the various relief measures to Victorian landowners under a process that is efficient and easy for landowners and their advisors to navigate. The current relief application process places a significant evidentiary burden on a landowner which is very time consuming. We believe the current application process is out of step with the intent of the relief on offer.
Purchasers of commercial and industrial properties in regional Victoria will be eligible for a 50% transfer duty concession from 1 January 2021 onwards. The current rate of the concession is 20%. This measure brings forward the previously scheduled increase of the concession rate to 50% from 1 July 2023 to 1 January 2021.
Congestion levy and liquor licensing fees
All owners and operators of public parking spaces and owners of non-exempt private parking spaces in Melbourne’s congestion levy areas will be eligible for a 25% waiver of the 2020 congestion levy and a deferral of all outstanding congestion levy balances until 31 March 2021.
Liquor licensing fees which have already been waived for 2020 will now also waived for 2021.
What other tax relief measures are available?
In addition to the above measures, businesses may be eligible for other tax relief measures that have been announced in response to the COVID-19 pandemic in Victoria as well as in the other states and territories. We have prepared a table summarising the various state and territory tax relief measures, which can be accessed here.
How can we help?
For more information in determining the various COVID-19 tax relief measures available to you, and with preparing and lodging the necessary tax relief applications please contact a Pitcher Partners representative.