What the new "windfall" tax will mean for Victorian landowners and property developers
The State Government announced this year that it will be introducing a new “windfall gains tax” from 1 July 2022. Developers and landowners will face a windfall gains tax of up to 50% applied to planning decisions to rezone land. This tax is likely to affect landowners who intend to rezone land for property development, as the land value will significantly increase once it has been rezoned for property development purposes.
Once the new laws are passed, this means that the total uplift in the value of a property or development site resulting from a rezoning decision will be taxed on a windfall of $100,000.00 or more, increasing on a sliding scale, with a 50% tax on a windfall above $500,000.00.
Although the legislation has not been passed, it is likely that the windfall tax will start incurring interest from the date of the rezoning, likely leaving the landowner open to a significant tax liability even before the land has been sold.
Land which is already subject to the Growth Areas Infrastructure Contribution (GAIC) will not be affected by the new tax. However only some parts of outer-suburban Melbourne are currently subject to the GAIC, leaving plenty of other areas in Victoria, which have not yet been developed, open to this new tax if the owner wants to change the zoning for property development.
How will this affect you?
If you are a landowner who owns significant land in Victoria and who wants to change the zoning to allow for future property development (e.g. current use as farming land), you are likely to be subject to the windfall tax.
If you have any questions on how this new tax may impact you or any other property related queries, please contact our Property Team on 03 9629 7411 or 03 9550 4600.