Issue 44 | The Property Development Review

THE PROPERTY DEVELOPMENT REVIEW

• charities and university land (in certain circumstances only); • land rezoned to a rural zone. Who is responsible for the WGT and when does it need to be paid?

What is payable on account of WGT? WGT is calculated by reference to the difference in the capital improved value (CIV) of the land with and without the rezoning, both as at 1 January preceding the rezoning.

Source: Department of Treasury and Finance Factsheet - Windfall Gains Tax

The Valuer General Victoria will be responsible for determining the value of land before and after a rezoning. In terms of the WGT liabilities, for a rezoning of land that results in a value uplift: • of more than $100,000 but less than $500,000 the tax will apply to marginal rate of 62.5% on the uplift above $100,000. • of $500,000 or more a tax rate of 50% will apply to the total uplift. In determining the value uplift of land, all land owned by the person or

The Landowner will be liable to pay the WGT . The liability can be deferred, either partially or in full, until the next dutiable event (or relevant acquisition in a landholding company or trust) occurs or thirty years after the rezoning event, whichever occurs first. An example of a duitable event would be a transfer of land. Interest will accrue over the deferral period at the 10-year Victorian Treasury bond rate. Once deferral ceases, full payment must be made within thirty days .

Source: Department of Treasury and Finance Factsheet - Windfall Gains Tax

groups of companies and/or trusts and subject to that rezoning will be taken into account. Exemptions The Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021 (vic) provides a number of exemptions: • residential land up to 2 hectares; • rezonings which seek to correct obvious or technical errors in planning provisions or the planning scheme; • land which is subject to a contract of sale or option before 15 May 2021 and where settlement has not occurred before the windfall gains tax event; • rezonings underway before 15 May 2021: this requires registration of the amendment tracking system before 15 May 2021; or before 15 May 2021 the owner of the land—

What next? The WGT is in its infancy. Landowners will no doubt seek to minimise their exposure to WGT liabilities, and this will ultimately require consideration of the “value uplift”, a valuation question. Planning Scheme Amendments are generally foreshadowed and processed over long time periods. It is unclear how changes in the market over the processing time of the amendment will be factored into the calculation and the value increases that can and can’t be attributed to a rezoning. For landowners, being alive to planning reforms and seeking advice from a planning or property professional in the early stages of a property transaction or redevelopment proposal will assist in foreshadowing a potential WGT event, and managing the potential liabilities.

-approached the Council to request the rezoning; and -paid for, was liable to pay for, or had otherwise performed or procured relevant work in relation to the rezoning; or -the total value of relevant work and relevant costs was not less than the threshold amount .