Land tax slugs Council’s tenant retailers

Land tax slugs Council’s tenant retailers

Council’s retail tenants along the north side of Oxford Street are again up in arms against their landlord, this time over massive land tax slugs of between $15–$30,000 per shop.

The tax hit comes after changes to the Retail Tenancy Act in 2005 allow the State Government to levy business tenants directly, at a time when the retailers say they are already reeling from successive changes to the area including the City’s street upgrade and six-lane “freeway conditions” at peak hours, courtesy of the RTA.

The businesses claim that Council failed to reveal the tax impost during lease negotiations, and are considering class litigation against Council.

Council’s position appears to be that tenants agree to pay outgoings and this is another outgoing, so the tenants just have to pay up.

Meanwhile the Office of State Revenue (OSR) is now demanding the cash.

Caught between the two sides is Andrew Duckmanton, president of the Darlinghurst Business Partnership, who says trying to establish the facts is like exploring “a dark, murky pool.”

“I’m reserving judgement until I can get all the facts,” he said, “but what I’m finding is a lot of animosity, a lot of fear and a lot of undisclosed facts.”

Council says the former South Sydney Council informed tenants they might be liable for land tax as far back as 1991, but Mr Duckmanton says no-one has been able to produce the letter.

The City says OSR wrote to all City tenants in September 2005 informing them of possible land tax liability.

“The City has also written directly to some tenants in the last few years advising that… any applicable Land Tax… is payable by the lessee,” said a spokesperson who also said The City’s commercial rents were adjusted to reflect the tenant’s land tax liability.

This is not true, says Wayne Nicol who runs Sax Fetish and is a tenant of Council.

“In the time since the legislation was enacted, the City as taken absolutely no action to advise their some 200 tenants of the effect of these legislative changes,” he said.

“Even worse, the City’s property department continued to induce tenants to enter leases that were based on Disclosure Statements with the material omission of this liability.”

He says this amounts to Council “making false and misleading statements with malicious intent,” making the leases invalid.

The City points out that it could not know the extent of land tax liability on its tenants because that depends on the extent of other landholdings the tenant might own.

Mr Duckmanton has met several times with senior Council staff over the past 18 months, and with the Lord Mayor Clover Moore.

He says the City has refused to supply some documentation quoting commercial in-confidence. On the other hand some tenants had also not supplied documents.

“But I do think the odds are stacked against the tenants and natural justice is being denied,” he said.

“Normally, a penalty is delayed until all negotiations or appeals have been concluded. In this case, discussions are continuing between Council and its tenants but a third party, the Office of State Revenue, is demanding immediate payment and there is no right of appeal.”

The City had announced plans to revitalise the street by developing and tenanting commercial space above street level but these plans appear to have been shelved.

by Michael Gormly

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