Land Tax Decision

A recent Supreme Court Decision has shined light on a grey area in the law regarding commercial leasing and Land Tax.

Who is affected?

The decision affects parties who entered into a commercial lease before 30 June 2009. It does not affect parties to a residential lease or a retail shop lease. The decision may provide landlords with a sudden windfall and tenants with a sudden liability.

What the law used to be

Prior to 30 June 2009, the Land Tax Act prohibited landlords from requiring tenants to pay land tax under commercial leases.

On 30 June 2009, the Act was amended to say the prohibition no longer applied to new leases going forward but it would continue to apply to leases entered into before 30 June 2009.

The Act was then replaced with a new Land Tax Act in 2010. The new Act allows landlords to require tenants to pay land tax under commercial leases.

Unfortunately, the legislation gave no indication whether the old land tax prohibition would continue to apply to leases entered into before 30 June 2009. This question was left unanswered for 5 years until a recent decision known as the Wyuna Court decision.


The Judge in the Wyuna Court Decision held that the new Act showed a clear intention to allow landlords to pursue tenants for land tax which has become payable since 30 June 2010, even if the lease was entered into prior to 30 June 2009.

What this means for tenants and landlords

Obviously, tenants now may face hefty bills for 5 years worth of land tax if their old leases contain clauses requiring them to pay “all rates, taxes and other outgoings”.

Tenants should start planning for this but there may be hope for them yet. The decision in this case has surprised several legal experts and may be subject to an appeal or even legislative amendments by the state government.

But if you’re a landlord or a tenant under an old lease, you might want to call your lawyer.


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