5261.0 - Economic measurement during COVID-19: Selected issues in the Economic Accounts, May 2020  
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This document was added or updated on 28/08/2020.

Rental relief under COVID-19

As part of their response to the coronavirus, a number of state and territory governments are providing rental relief to eligible residential tenants. While details vary between states and territories, this note considers two of the main methods: payments to lessors and land tax reductions (footnote 1). Examples of payments to lessors and land tax reductions include:

  • New South Wales – a land tax reduction of up to 25 percent of the land tax liability (footnote 2);
  • Victoria – a land tax reduction of up to 25 percent of the land tax liability (footnote 3), and a one-off payment to lessors of up to $2,000 (footnote 4);
  • Queensland – a land tax reduction of up to 25 percent of the land tax liability (footnote 5), and a one-off payment to lessors of up to $2,000 (footnote 6);
  • South Australia – a land tax reduction of up to 25 percent of the land tax liability (footnote 7);
  • Western Australia – a one-off payment to lessors of up to $2,000 (footnote 8); and
  • Australian Capital Territory – where rental payable by residential tenants is reduced by at least 25 percent, rental relief equal to half the reduction (to a maximum of $2,600 over six months (or $100 per week)) is provided to lessors. Rental relief is applied against the lessor’s land tax liabilities. If land tax liabilities are lower than the rental relief, the remainder is applied against general rates (footnote 9).

All three examples of payments to lessors are social transfers in kind

Social transfers in kind comprise “goods and services provided to households by government and NPISHs either free or at prices that are not economically significant” (2008 SNA para 8.141). Social transfers in kind are a subset of final consumption expenditure of general government and will impact the CPI and volume estimates of final consumption expenditure (Annex A). Examples of social transfers in kind are the Pharmaceutical Benefits Scheme and Child Care Subsidy.

Payments to lessors are social transfers in kind. They are payments to market producers of a specific product to address social risk (housing) which are not intermediate consumption of general government.

All five examples of land tax reductions are tax relief

All five examples of land tax reductions are tax relief which reduce the lessor’s land tax liability. Tax relief measures are “incentives that reduce the amount of tax owed by an institutional unit” (GFSM14, para 5.28) and are generally classified as a reduction in the tax liability to which the measures relate. Tax relief measures include tax allowances, exemptions, deductions and tax credits. The first three tax relief measures are subtracted from the tax base before the tax liability is computed.

Tax credits are calculated after the tax liability has been computed and are either payable or non-payable (2008 SNA, para 22). Non-payable tax credits are recorded as a reduction in the relevant tax (footnote 10). Payable tax credits “should be considered as expenses and recorded as such at their total amount” (2008 SNA, para 22.97). Tax credits are non-payable if their value cannot exceed the tax liability and are therefore limited to the size of the tax liability of the taxpayer (GFSM14, para 5.29).

Land tax reductions in New South Wales, Victoria, Queensland, and South Australia are non-payable tax credits which reduce the amount of land tax liability of the lessor (footnote 11). They are non-payable tax credits as the value of the land tax reduction cannot exceed the lessor’s land tax liability. As residential tenants do not receive non-payable tax credits (they are received by the lessor), any reduction in rental payable by residential tenants must be considered separately.

Land tax reductions in the Australian Capital Territory are payable tax credits recorded as social benefits in kind. They are payable as the land tax reduction (a proportion of the rental) can exceed the land tax liability. Land tax reductions in the Australian Capital Territory are social transfers in kind as they are payments to market producers of a specific product to address social risk (housing) which are not intermediate consumption of general government.

Annex A: The CPI and SNA differ in the recording of social transfers in kind

The CPI and SNA do not have the same definition of purchasers’ prices. According to he CPI Manual 2020 (footnote 12), purchasers’ prices are defined as “prices paid by consumers to acquire ownership of goods or services and include any taxes and service charges on the products, and taking account of all discounts, subsidies and most rebates, even if discriminatory or conditional” (CPI Manual 2020, para 2.210). It further notes (CPI Manual 2020, para 2.112) that “the use of the term subsidies [in the CPI] is broader than the use in the SNA.”

The 2008 SNA definition of purchasers’ prices does not deduct social transfers in kind. 2008 SNA defines purchasers’ prices as “basic prices (the amount received by the producer) + taxes on products excluding invoiced VAT – subsidies on products” (2008 SNA Figure 6.1). Most social transfers in kind form part of the CPI item “most rebates”.

Price changes in the CPI and national accounts will diverge when changes in social transfers in kind occur. All other things equal, the CPI will increase (decrease) when social transfers in kind decrease (increase). No price change will be recorded in the national accounts when social transfers in kind decrease (increase) - the volume of final consumption expenditure of households and government will record offsetting changes.


1 This note has been compiled by Ben Loughton.<back
2 https://www.service.nsw.gov.au/transaction/apply-covid-19-land-tax-relief?q=transaction+apply+covid+19+land+tax+relief<back
3 https://www.sro.vic.gov.au/land-tax/claim-coronavirus-land-tax-relief <back
4 https://rentrelief.covid19.dhhs.vic.gov.au/ <back
5 https://www.qld.gov.au/environment/land/tax/covid-19 <back
6 https://www.qld.gov.au/housing/renting/rent-assistance/bond-loan/covid19-rental-grant <back
7 https://www.premier.sa.gov.au/news/media-releases/news/landlords-and-tenants-benefit-from-extra-%2450m-in-land-tax-relief <back
8 https://www.commerce.wa.gov.au/consumer-protection/residential-rent-relief-grant-scheme <back
9 https://www.justice.act.gov.au/safer-communities/protection-rights/information-landlords-and-agents-impacted-covid-19 <back
10 An example of a non-payable tax credit is https://www.abs.gov.au/AUSSTATS/abs@.nsf/Latestproducts/5261.0Main%20Features5May%202020?opendocument&tabname=Summary&prodno=5261.0&issue=May%202020&num=&view= <back
11 Land tax (and thus land tax reductions) cannot be recorded for non-residents. As non-residents cannot own land and buildings (2008 SNA, para 41.15(d)), a notional resident unit is created in the economic accounts. <back
12 https://www.imf.org/~/media/Files/Data/CPI/cpi-manual-concepts-and-methods.ashx?la=en <back



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