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Windfall gains tax, what you need to know......

What is windfall gains tax

Windfall gains tax is a Victorian State Government tax which will come into effect on 1 July this year.

It will apply to land that is subject to rezoning which results in more than $100,000 increase to the value of your property.

The rationale behind the tax is that the property owner has benefited from a "windfall"

due to the rezoning of the land.

What is rezoning

Rezoning is an amendment of a planning scheme that changes a zone of the property. The rezoning can happen in a number of ways, the most common being at the request of the landowner and by the planning authority following a broad change.

Rate of windfall gains tax

For any increase of more than $100,000 in property value from rezoning, the following tax rates apply:

  • more than $100,000 but less than $500,000: the tax will apply at a marginal rate of 62.5% on the uplift above $100,000

  • $500,000 or more: a tax rate of 50% will apply to the total uplift

Windfall gains tax exemptions/exclusions

There are some exemptions and exclusions, these are:

  1. Residential land exemption

  2. Land entitled to a transitional exemption from windfall gains tax

  3. Land rezoned to or from the Urban Growth Zone within the Growth Areas Infrastructure Contribution (GAIC) area

  4. Charitable and university land

  5. Land rezoned to Public Land Zones

  6. Land rezoned to correct an obvious or technical error in the Victoria Planning Provisions or a planning scheme

  7. Land rezoned to a Rural Zone (other than the Rural Living Zone)

Who pays the windfall gains tax

The owner of the land is responsible for payment of the windfall gains tax.

When is windfall gains tax payable

Once a windfall gains tax liability is assessed, the landowner will be issued with a tax assessment which will contain a due date.

There is an option to defer payment of all or part of the tax until the next dutiable transaction or for a period of 30 years (whichever occurs first).

How will you know if you property will be rezoned

To find out if your property is likely to be rezoned, you should talk to your local planning authority.

Selling a property?

Contact us if you have any questions regarding the sale of your property and the impacts, if any, of windfall gains tax on that sale.

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