Canberra developers set to save up to $250,000 in taxes: Chief Minister Andrew Barr

However industry groups say the concession has fallen short, and won't lead to major projects getting off the ground.

Under the government's latest round of coronavirus stimulus measures, developers will temporarily be able to save up to $250,000 in taxes.

Chief Minister Andrew Barr said lease variation charges would be cut by 50 per cent to encourage development.

Mr Barr made the announcement at a Property Council event on Thursday morning.

The 50 per cent reduction applies to lease variation charges paid from Thursday until December 23.

Construction must start by March 31, 2021, regardless of when the development application was lodged or approved.

Property developers pay the tax when granted permission to vary the permitted use of the land under the crown lease. For example, changing a house block to allow town houses or units.

The government says the tax is to take into account the increase in land value that would come from changing the crown lease.

Mr Barr said the tax break would apply to about $150 million worth of new projects.

More than 90 per cent of developments requiring a change in crown lease would be able to claim the full 50 per cent tax reduction.

"We will be well placed to continue to support development and constriction activity during and beyond the pandemic," he said.

"Unlike most jurisdictions, our development application process is fully electronic and we've employed additional staff within the planning authority to process data as they came on board."

The government's lease variation charge has been a contentious tax, widely despised by the property sector.

It has been criticised for stifling urban renewal and not raising the revenue it was predicted to.

Master Builders ACT CEO Michael Hopkins said while the incentive would help many smaller projects, the $250,000 cap will severely limit the potential benefit.

"Lease variation charges for major projects can be as high as $3 or $4 million dollars, or higher," he said.

"A $250,000 remission is unlikely to incentivise developers to bring forward major projects.

"This will mean that individual projects which could generate hundreds of jobs will probably stay on hold."

Opposition Leader Alistair Coe said the cuts to the charges were a con, with few set to benefit.

"Even before the COVID crisis, activity in the construction sector was grinding to halt due to lengthy delays to processing development applications," Mr Coe said.

"In 2019, the value of building projects was down more than 70 per cent than the previous year because of Andrew Barr's development approval crisis.

"This would be a more meaningful incentive if the Barr Government demonstrated any desire to process development applications within statutory timeframes. This is absolutely vital to create jobs and strengthen our local economy."

Lease variation charges collected the government almost $33 million in revenue last financial year, up on just $6 million the year prior.

However the latest financial statements show as of March, before the full effects of the coronavirus crisis hit, the government only expected to rake in $23 million this financial year from the tax.

Under the lease variation tax, a land use change that was deemed to increase the value by $500,000 would usually incur a charge of $375,000. That charge will be reduced to $185,000 under the scheme.

Mr Barr said it was one of more than 50 measures taken by the government over the past three months to inject money into the economy.

"It is impossible to accurately quantify the full impact of the continuing pandemic, but the pain will be felt by every business and every household," he said.

"The ACT Government has a responsible and sustainable plan to weather the economic storm and rebuild our economy.

"Property and construction have a role to play in the economic recovery."