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Victoria will impose a tax of 50% on the increase in value of land that is due to a rezoning. This new tax will apply from 1 July 2023.

The owner of the land becomes liable to the tax on the rezoning occurring with the obligation to pay on issue of assessment. There is the ability to defer payment of the tax until the next dutiable transaction for the land or 30 years (whichever is the lesser).

Deferral of tax attracts compound interest at the Victorian 10 year Treasury bond rate. The main exceptions to the tax on rezoning are where the increase in value is less than $100,000, the land is residential land that less than two hectares, and agricultural land of up to two hectares where there is a residence on it

Details of the Windfall Gains Tax


The new tax, known as Windfall Gains Tax (WGT), is introduced by the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021 (Act)—assented to on 30 November 2021.

WGT is imposed on land that is rezoned by a WGT Event. Liability to the tax arises when the WGT Event occurs pursuant to ss 6 and 7 of the Act. WGT Event is defined in s 3(1) of the Act to mean a rezoning other than an excluded rezoning.

Excluded rezoning includes rezoning between schedules in the same zone, certain Urban Growth Zones, rezonings where s201RC of the Planning and Environment Act applies, rezonings to public land and within public land zones.

The value of the increase is determined by the Valuer General.

Calculation of tax

The tax applies where the increase in value is more than $100,000. Where the increase is between $100,000 and $500,000 the rate is 62.5%, so that at $500,000, 50% of the total increase is payable as WGT. Thereafter the rate is 50% of the taxable value uplift (s 9).

The general net effect of the Act is that WGT is imposed on the value after the rezoning less the value before the rezoning of the rateable land, subject to any regulations that allow deductions that are made under the Act. There are also various provisions to deal with rateable and non-rateable land.

Division 2 of Part 3 of the Act provides in broad terms that the calculation of increase in value takes into account all land owned by the person and group entities that has increased as a result of the rezoning event, but excludes any land that has decreased in value after taking into account deductions as a result of that event.

Divisions 3 and 4 of Part 3 of the Act provide that the taxable value subject to the WGT is the aggregate taxable value of all land owned by the taxpayer in the area rezoned, together with group entities of the taxpayer—groups companies and groups trusts.


Part 4 of the Act provides for deferral of the WGT. This requires a landholder to make an election to defer the WGT before the WGT becomes payable, unless the Commissioner allows further time for the landholder to make such an election. WGT is assessed under the Taxation Administration Act in s 14 and the tax will become payable on the date specified in the assessment.

Pursuant to s 32 of the Act, payment may be deferred until the earlier of any of the following occurs:

  • a dutiable transaction in relation to the land

  • there is a relevant acquisition (for example, an acquisition of an interest in an entity owning land and other landholder acquisitions dutiable pursuant to s 78 of the Duties Act 2000 (Vic)) other than an excluded relevant acquisition that occurs in respect of the landholder who is the owner of the land, or

  • 30 years.

Certain dutiable transactions are excluded, for example:

  • economic entitlements under Part 4B of Chapter 2 of the Duties Act (s 28)

  • transfers of property of a deceased estate pursuant to the Transfer of Land Act (s 49)

  • no consideration dutiable transactions, and

  • charity land transactions.

Thus, death of the landholder should not trigger the obligation to pay WGT.

In a circumstance where a dutiable transaction occurs, the transferee has to agree to assume the liability to pay WGT when duty is assessed on that transaction (s 29(1)).

Where payment is deferred, interest is payable, which compounds daily at the 10 year Treasury bond rate (s 35).

Exemptions and waivers

Part 5 of the Act provides for certain exemptions and waivers. Section 37 (1) highlights an example of an exemption for residential land up to two hectares. In the event residential land has an area exceeding two hectares, there is a reduction by excluding the increase in value of two hectares from the total increase in value assessed for WGT (s 37(2)).

In another notable example, in the case of land used for primary production, it will satisfy the definition of residential land where there is a residence on the property that may be lawfully used as such. In such cases, unless the total farm is less than two hectares, the apportionment provisions in s 37(2) of the Act will be triggered as it is intended that only the two hectares referable to the principal residence be exempted.

Tax priority

Part 6 of the Act provides that the WGT and interest are a first charge on the land.


As with any new tax there will be unforeseen issues.

As the tax applies by reference to an assessed change in value, rather than on amounts received on disposal of the land by the landholder, the assessed value may have no relationship to the actual value realised by a landowner due to the rezoning.

The effects of compounding interest will also need to be considered if a landowner decides to elect to defer the payment of WGT.


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