As a response to the coronavirus (‘COVID-19’) pandemic currently impacting the economy and businesses, the NSW Government has announced various tax relief measures and other support packages to help businesses affected by COVID-19.
Below are the key initiatives announced by the New South Wales Government:
Payroll Tax
Payroll tax relief is available under the following circumstances:
(a) If grouped Australian wages are $10 million or less – The payroll tax liability for 2019/20 will be reduced by 25% on lodgment of the annual reconciliation due on 28 July 2020. For businesses that lodge and pay monthly, no payment is required for March, April, or May 2020. These businesses will also have the option of deferring the payments by an additional three months.
(b) If grouped Australian wages are more than $10 million – Payment of payroll tax can be deferred for up to six months – payment will not be required for the March 2020 period (normally due on 7 April 2020).
Furthermore, the payroll tax threshold for the 2020/21 financial year will be increased from $900,000 to $1 million.
Payments made under the Federal Government’s JobKeeper Scheme are expected to be exempt from payroll tax. Some states (South Australia and Western Australia) have confirmed that JobKeeper payments will not be subject to payroll tax, but other states and territories are yet to be confirmed.
Land Tax/Rates
Various measures are available to assist taxpayers with land tax payments, such as extending deadlines for payments and applying leniency for late payment. Taxpayers can apply online to pay land tax in instalments.
There are also land tax concessions for landlords (see below), which are linked to providing rent relief to tenants.
Relief for Landlords and Tenants
On 29 March 2020, the NSW Government committed to implementing a six-month moratorium on rental evictions for commercial and residential tenants in financial distress, and a mandatory code of conduct for commercial tenancies to support small and medium-sized businesses affected by COVID-19, as agreed at National Cabinet.
On 13 April 2020, the NSW Government announced a $440 million land tax relief package to be split 50/50 between the commercial and residential sectors. The following key measures are included as part of the package:
(a) Commercial tenancies – Landlords can apply for a concession of up to 25% of the 2020 calendar year land tax liability on relevant properties if the savings are passed on to tenants via a rent reduction. Also, a land tax deferral of any outstanding amounts for a three-month period will be offered to landlords who claim the land tax concession.
The Government will give effect to the ‘National Cabinet Mandatory Code of Conduct – SME Commercial Leasing Principles During COVID-19’, which includes the following key measures:
- Landlords must negotiate rent relief with tenants in financial distress due to COVID-19 by applying the leasing principles in the Code.
- A ban on the termination of a lease for non-payment of rent.
- A freeze in rent increases.
This measure will apply to business tenants (with an annual turnover of less than $50 million) that are eligible for the Federal Government’s JobKeeper program.
(b) Residential tenancies – Landlords will be eligible for a land tax waiver or rebate of up to 25% if they pass the saving on to tenants in financial distress (broadly, where household income is reduced by 25% or more).
There will also be an interim 60 day stop on landlords issuing termination notices or applying for eviction orders due to rental arrears, where tenants are financially disadvantaged by COVID-19. Landlords must negotiate a rent reduction with the tenant in good faith in the first instance.
Other measures include a deferral of rent payments for six months for commercial tenants with less than 20 employees in all Government-owned properties.
Small Business
Small business owners are eligible for a grant of up to $10,000 if they:
- have between 1-19 employees and an annual turnover of more than $75,000;
- have total Australian wages below the NSW 2019/20 payroll tax threshold;
- have an ABN as at 1 March 2020, are based in NSW and employ staff as at 1 March 2020;
- are highly impacted by the NSW Government COVID-19 restrictions issued on 30 March 2020 (broadly, defined as a decline in turnover of 75%); and
- have unavoidable business costs not otherwise the subject of other NSW and Commonwealth Government financial assistance measures.
Liquor Licence
Annual liquor licence base fees, trading hours risk loading fees and new liquor licence application fees will be waived for 12 months from 1 April 2020.
Compliance risk loadings will not be waived but deferred and included as part of 2021/22 annual liquor licence fees.
Fees and Levies
The NSW Government is waiving a range of licence and permit fees for businesses for 12 months, from 1 April, 15 April or from 20 April 2020.
As well as liquor licence fees, other fees being waived include:
- tattoo parlour operator licence (from 1 April 2020);
- home building contractor licence (from 15 April 2020);
- trade or specialist contractor licence (from 15 April 2020);
- motor vehicle repairer specialist licence (from 15 April 2020);
- high risk work licence (from 15 April 2020);
- home building: tradesperson certificates (from 20 April 2020); and
- motor vehicle tradesperson certificates (from 20 April 2020).
Parking space levy payments will be deferred until 30 September 2020.
Gaming Machines
Clubs and hotels’ gaming machine payments due in March 2020 will be deferred until 1 September 2020, conditional on these funds being used to retain staff.