The Land Tax and Taxation Administration Amendment Bill 2009, released in December 2008, proposes to remove the current prohibition on recovering land tax from lessees from the Land Tax Act 1915. Currently, the Land Tax Act 1915, the Retail Shop Leases Act 1994 and the Residential Tenancies Act 1994 all prohibit lessors from recovering land tax from their lessees.
If passed, the Bill will have the effect that lessors of commercial and industrial property, and retail premises not covered by the Retail Shop Leases Act 1994, will be able to pass the cost of land tax on to their lessees in their leases. The changes will only apply to new leases which are signed and commence after 30 June 2009. As the Residential Tenancies Act 1994 and the Retail Shop Leases Act 1994 are not amended, lessors will still be unable to recover land tax from lessees of applicable retail and residential premises.
Lessors should consider having their standard lease documents, including disclosures and letters of offer, amended to provide for recovery of land tax if lawful. As leases which will not be entered into until after the Bill takes effect may be negotiated before that date, these changes should be provided for in relevant documents in order to avoid missing out on the ability to recover land tax if the amendments should be passed.
In Summary:
- The Bill is not yet law.
- The Bill proposes to remove the blanket prohibition on lessors recovering land tax from lessees.
- Lessors will still be prohibited from recovering land tax from lessees of residential property and retail premises.
- The amendment will not affect leases if they are either signed or commence before 30 June 2009.
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