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Legislative provisions made to ensure no undue burden on landlords passing on property tax rebates

Legislative provisions made to ensure no undue burden on landlords passing on property tax rebates

Source: Straits Times
Article Date: 04 Nov 2020
Author: Choo Yun Ting

New regulations ensure that the rent waivers landlords grant to tenants under the rental relief framework are considered part of their obligations.

New regulations will make certain there is "no undue burden" on commercial landlords when they pass on obligatory property tax rebates to tenants, Second Minister of Finance Lawrence Wong said in Parliament on Tuesday (Nov 3).

The provisions passed under the Covid-19 (Temporary Measures) Act on Tuesday ensure that the rent waivers that landlords grant to tenants under the rental relief framework are also considered as part of their obligations.

Illustrating how the amendments will benefit landlords, Mr Wong cited an example of a change in tenants halfway through the year, with one terminating their occupancy in July and another taking up the space from August.

If the first tenant is a small- and medium-sized enterprise (SME), the property owner would have to waive up to four months of rent from April to July under the rental relief framework.

The owner should have then satisfied his obligations to pass on the benefits of the property tax rebate, which is about 1.2 months of rent, as well as some of the cash grants, Mr Wong noted.

But under the existing property tax rebate regulations, the landlord would also be required to pass on the benefit of the property tax rebate to the second tenant, pro-rated to about 0.5 months, he pointed out.

"This is not the intended outcome. This is because the owner had already waived four months of rent for Tenant A under the rental relief framework and passed on the benefit of the property tax rebate to Tenant A. So, the owner should not need to pass on any benefit of the property tax rebate to Tenant B.

"That's why the Bill provides regulations to be made retrospectively, to ensure that this position is maintained," Mr Wong said.

The Bill also allows regulations to be made to allow the owner to recover the excess amounts from the second tenant if he or she has already passed on the benefit of the property tax rebate, he added.

Details of the regulations will be provided through subsidiary legislation and on the Inland Revenue Authority of Singapore's website when ready, Mr Wong said.

The property tax rebate was announced as part of budget measures in February and enhanced in March, where owners of non-residential property were granted between 30 per cent and 100 per cent of the rebate on property tax payable.

Under the rental relief framework, cash grants are also given to qualifying property owners who are required to provide rental relief to eligible SME and non-profit organisation tenants.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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