The Affordable Community Housing Land Tax Exemption Pilot
The Affordable Community Housing Land Tax Exemption Pilot provides eligible property owners with ex gratia relief, equivalent to a land tax exemption for property they rent through a participating community housing provider for affordable housing purposes.
The pilot program will run for five years, commencing 1 March 2020 and is limited to 100 South Australian properties.
What property is eligible for the exemption?
For a property to be eligible for the exemption, the following must apply:
- There is an agreement between the property owner and a participating community housing provider that makes the property available to tenants for the purpose of affordable community housing.
- The agreement was entered into on or after 1 March 2020.
- The tenant(s) must not be related to the owner.
- Rent charged is less than 75% of the current market rent.
- The tenant(s)’s household income must be low to moderate, consistent with the income limits defined by the South Australian Government’s HomeSeeker SA Program.
Can companies or trusts receive the exemption?
Yes, the property can be owned by natural persons, companies, trusts or a mixture of owners.
Who are the participating community housing providers?
The current registered community housing providers are:
Unity Housing Company Ltd
Contact: Andrew Davis, 0439 821 137, firstname.lastname@example.org
Cornerstone Housing Ltd
Contact: Aaron Ross, (08) 8165 5300, email@example.com
AnglicareSA Housing Ltd
Contact: Joe Capozza, (08) 8305 9136, firstname.lastname@example.org
What is a ‘related person’?
A related person includes the parents, grandparents, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the owner or the spouse of the owner or the spouse’s related persons.
A natural person and a company are related persons if the natural person is a majority shareholder, director or secretary in or of the company or in or of another company that is a related body corporate of the company.
A natural person and a trustee are related persons if the natural person is a beneficiary of the trust which the trustee is a trustee.
A spouse includes domestic partners.
What is ‘market rent’?
Market rent is the rent that a lessor would charge if the land was rented by a willing lessor to a willing lessee dealing with each other at arm’s length, and acting knowledgeably, sensibly and without compulsion.
Simply, it is the rental rate that would be charged for similar rental properties in an open market.
What is ‘low to moderate’ household income?
There are the maximum levels of income and assets for a household to be eligible for the Affordable Homes Program.
The limits are reviewed annually.
Only the income limits are relevant for tenants participating in the pilot. Assets will not be considered for exemption eligibility.
When will the exemption apply?
An exemption taken up between the commencement of the pilot program and the start of the 2020-21 financial year will apply from the next land tax assessment year i.e. for a property leased through a community housing provider with an agreement in place from 1 March 2020, the property owner will be eligible for a land tax exemption from the 2020-21 financial year.
The exemption will apply for the following financial years if the exemption criteria continues to be met (up to the 2024-25 financial year).
What if the agreement is entered into part way into a financial year?
If you enter into an agreement with a community housing provider during a financial year you can still apply for the exemption.
In these cases you will not receive a full exemption for the financial year in which you apply, rather a proportion of the exemption based on the number of days the agreement is in place and the property is tenanted.
A full exemption will apply for the following financial years if the exemption criteria continues to be met (up to the 2024-25 financial year).
For example: someone who is eligible from 1 January 2020, can receive 50% of the exemption for the 2020-21 financial year. If the criteria continue to be met, they can receive the full year exemption for the 2021-22 financial year.
Will the exemption apply in future financial years?
The pilot program is limited to 100 South Australian properties. If the allocation of 100 properties has not been exhausted in the first year, the exemption will be available for new applicants in future financial years up to and including the 2024-25 financial year.
When does the exemption not apply?
An exemption will not apply if the property is not rented within three months of becoming available under the agreement.
When does the exemption cease?
The exemption will cease if the property stops being rented for longer than three months under the agreement during the financial year.
In this case, you no longer satisfy all the eligibility criteria. Your exemption will be removed and your land tax will be reassessed for the relevant financial year. A Notice of Assessment will be issued, which may include increases to the land tax payable for other taxable properties owned.
How do I apply for an exemption?
Online applications open 1 March 2020 and must include a copy of the signed agreement with the participating community housing provider and evidence the property is tenanted.
You can apply online and your application must include a copy of the signed agreement with the participating housing provider and evidence the property is tenanted.
Applications may be made by the participating community housing provider on behalf of property owners if acting as their agent.
What evidence must the participating community housing provider provide?
The participating community housing provider is required, under each agreement, to provide an annual acquittal confirming that the property has been rented under the affordable housing agreement for greater than nine months during the year (prorated for part year when agreement is entered during the year).
The annual acquittal must include evidence of the rental arrangement, including the amount of rent, confirmation of the market rent and the tenant’s income.
The annual acquittal must be provided by 31 July for the previous financial year.
What must I do if my property is no longer available under the affordable community housing scheme?
The property owner must advise RevenueSA immediately if the property is withdrawn from a community housing provider and is no longer made available under the affordable community housing scheme.
If you no longer satisfy all the eligibility criteria, your exemption will be removed and your land tax will be reassessed for the relevant financial year. A Notice of Assessment will be issued, which may include increases to the land tax payable for other taxable properties owned.
RevenueSA will also undertake a range of compliance activities to ensure the exemption is only provided to eligible recipients.