outgoings for a retail tenant
- Thread starter belleran
- Start date
Land tax is only excluded if you are covered by the Retail Shop Leases Act 1994 Qld. What sort of business and are you located in a retail shopping centre (5 or more shops with 1 owner or 1 head lessee) If not applicable, law has changed and Land tax can now be and often is, passed on to the tenant.
Definition from the Act
Meaning of outgoings
(1) A lessor’s outgoings for a retail shopping centre or leased
building are—
(a) the lessor’s reasonable expenses directly attributable to
the operation, maintenance or repair of—
(i) the centre or building; and
(ii) areas used in association with the centre or
building; and
(b) charges, levies, premiums, rates or taxes payable by the
lessor because the lessor is the owner or occupier of—
(i) the centre or building; or
(ii) the land on which the centre or building is situated;
and
(c) an amount mentioned in section 24A(2).
(2) An outgoing mentioned in subsection (1) may be either an
apportionable outgoing or a specific outgoing and the sum of
the apportionable outgoings and specific outgoings is the
lessor’s outgoings.
(3) However, lessor’s outgoings do not include—
(a) land tax payable on the land on which the centre or
building is situated; and
(b) expenditure of a capital nature, including the
amortisation of capital costs; and
(c) contributions to a depreciation or sinking fund; and
(d) insurance premiums for loss of profits; and
(e) lessor’s contributions to merchants’ associations and
centre promotion funds; and
(f) payment of interest and charges on amounts borrowed
by the lessor; and
(g) another item prescribed by regulation.
This is an outgoings clause from a non-retail shop lease
An example outgoings clause
2.1.16. "the “Outgoings” means all expenses and outgoings paid or incurred by the Lessor in respect of the Premises under the following heads of expenditure but excluding those of a capital nature:
(a) Rates, charges and other levies (including any benefited mall area levy) payable to the local authority in whose area the Premises are located.
(b) Rates and charges payable to any local or other authority responsible for the provision or reticulation of water and/or sewerage and/or drainage services.
(c) Levies, contributions and/or other amounts payable to any local or other authority for or on account of fire protection services.
(d) Land tax
(e) All rates, taxes, charges, assessments, outgoings, and impositions (whether parliamentary, municipal, or otherwise and whether assessed, charged, or imposed by or under Federal or State law or by Federal State or Local authorities and whether on a capital, revenue value, or any other basis and even though of a novel character) which are assessed, charged, or imposed in respect of the Premises or any part of them other than:
(i) income tax and capital gains tax.
(f) All charges for electricity, gas, oil, or other fuel incurred in the operation of the Air Conditioning Equipment and other plant and equipment in the Premises.
(g) Insurance premiums and other charges (including stamp duties) for insurance of the Premises against fire with extended cover endorsement for vandalism, malicious mischief, earthquake, flood, water damage, boiler and pressure vessel explosion, fusion, and mechanical breakdown in broad cover form with repair and replacement terms and other risks determined by the Lessor in its absolute discretion including, but not limited to, consequential losses and loss of all rents receivable from the Premises including all other charges payable in addition to the Rent in an amount or amounts and for periods determined by the Lessor.
(h) Public risk liability insurance against third party liability hazards including exposure to personal injury, bodily injury, and property damage on an occurrence basis including insurance for all contractual obligations and covering also actions of all employees, other persons, subcontractors and agents while working on behalf of the Lessor. The policy will be written on a comprehensive basis with limits of not less than $5 million per occurrence or higher amounts reasonably required by the Lessor from time to time.
(i) Levies raised by the Body Corporate in respect of the Land but excluding special levies.
And the list can go on and on and on, especially in a well structured lease.
You should also have to repaint and re do floor coverings every 3 years or so and repaint the outside of the building if it is a stand alone.
Don't forget glass breakages, plumbing and electrical repairs attributed to you and also air conditioning expenses, as these can add up.
example clause
7.7 Air conditioning Equipment
The Lessee will:
7.7.1 enter into a maintenance contract with a reputable and licensed air conditioning contractor to conduct regular maintenance of the air conditioning equipment at the expense of the lessee;
7.7.2 carry out all repairs and maintenance required to ensure air conditioning equipment is in good working order
Good luck
Definition from the Act
Meaning of outgoings
(1) A lessor’s outgoings for a retail shopping centre or leased
building are—
(a) the lessor’s reasonable expenses directly attributable to
the operation, maintenance or repair of—
(i) the centre or building; and
(ii) areas used in association with the centre or
building; and
(b) charges, levies, premiums, rates or taxes payable by the
lessor because the lessor is the owner or occupier of—
(i) the centre or building; or
(ii) the land on which the centre or building is situated;
and
(c) an amount mentioned in section 24A(2).
(2) An outgoing mentioned in subsection (1) may be either an
apportionable outgoing or a specific outgoing and the sum of
the apportionable outgoings and specific outgoings is the
lessor’s outgoings.
(3) However, lessor’s outgoings do not include—
(a) land tax payable on the land on which the centre or
building is situated; and
(b) expenditure of a capital nature, including the
amortisation of capital costs; and
(c) contributions to a depreciation or sinking fund; and
(d) insurance premiums for loss of profits; and
(e) lessor’s contributions to merchants’ associations and
centre promotion funds; and
(f) payment of interest and charges on amounts borrowed
by the lessor; and
(g) another item prescribed by regulation.
This is an outgoings clause from a non-retail shop lease
An example outgoings clause
2.1.16. "the “Outgoings” means all expenses and outgoings paid or incurred by the Lessor in respect of the Premises under the following heads of expenditure but excluding those of a capital nature:
(a) Rates, charges and other levies (including any benefited mall area levy) payable to the local authority in whose area the Premises are located.
(b) Rates and charges payable to any local or other authority responsible for the provision or reticulation of water and/or sewerage and/or drainage services.
(c) Levies, contributions and/or other amounts payable to any local or other authority for or on account of fire protection services.
(d) Land tax
(e) All rates, taxes, charges, assessments, outgoings, and impositions (whether parliamentary, municipal, or otherwise and whether assessed, charged, or imposed by or under Federal or State law or by Federal State or Local authorities and whether on a capital, revenue value, or any other basis and even though of a novel character) which are assessed, charged, or imposed in respect of the Premises or any part of them other than:
(i) income tax and capital gains tax.
(f) All charges for electricity, gas, oil, or other fuel incurred in the operation of the Air Conditioning Equipment and other plant and equipment in the Premises.
(g) Insurance premiums and other charges (including stamp duties) for insurance of the Premises against fire with extended cover endorsement for vandalism, malicious mischief, earthquake, flood, water damage, boiler and pressure vessel explosion, fusion, and mechanical breakdown in broad cover form with repair and replacement terms and other risks determined by the Lessor in its absolute discretion including, but not limited to, consequential losses and loss of all rents receivable from the Premises including all other charges payable in addition to the Rent in an amount or amounts and for periods determined by the Lessor.
(h) Public risk liability insurance against third party liability hazards including exposure to personal injury, bodily injury, and property damage on an occurrence basis including insurance for all contractual obligations and covering also actions of all employees, other persons, subcontractors and agents while working on behalf of the Lessor. The policy will be written on a comprehensive basis with limits of not less than $5 million per occurrence or higher amounts reasonably required by the Lessor from time to time.
(i) Levies raised by the Body Corporate in respect of the Land but excluding special levies.
And the list can go on and on and on, especially in a well structured lease.
You should also have to repaint and re do floor coverings every 3 years or so and repaint the outside of the building if it is a stand alone.
Don't forget glass breakages, plumbing and electrical repairs attributed to you and also air conditioning expenses, as these can add up.
example clause
7.7 Air conditioning Equipment
The Lessee will:
7.7.1 enter into a maintenance contract with a reputable and licensed air conditioning contractor to conduct regular maintenance of the air conditioning equipment at the expense of the lessee;
7.7.2 carry out all repairs and maintenance required to ensure air conditioning equipment is in good working order
Good luck
Hi Bellaran, there is no specific list of what the lessor can/can't charge in NSW but here's a link to the NSW Retail Leases Act
There are specific things that need to be looked at when you get your disclosure statement, outgoings reconciliation statement & annual outgoings budget:
Retail Leases Act S26 (Land Tax)
Also look at items like sinking fund contributions (try to avoid any contribution as it may be used for capital works/improvements which you aren't liable).
You should also look closely at the outgoings clause in your lease to confirm what has been included in the clause and your obligations.
There are specific things that need to be looked at when you get your disclosure statement, outgoings reconciliation statement & annual outgoings budget:
Retail Leases Act S26 (Land Tax)
Also look at items like sinking fund contributions (try to avoid any contribution as it may be used for capital works/improvements which you aren't liable).
You should also look closely at the outgoings clause in your lease to confirm what has been included in the clause and your obligations.
