Windfall Gains Tax Lawyers

Windfall Gains Tax applies if a relevant rezoning takes place from 1 July 2023 and the taxable value uplift – the difference between the capital improved value of the land before (CIV₁) and after the rezoning takes effect (CIV₂) resulting from the rezoning is more than $100,000.

Different rates of windfall gains tax apply based on the taxable value uplift as follows:

• 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

It is important to note that when the taxable value uplift of land is calculated, all land owned by the person or group subject to that particular rezoning is taken into account.

Under the transitional provisions, no windfall gains tax applies if the rezoning relates to pre-existing contracts of sale and options executed before 15 May 2021 or in relation to rezonings underway before 15 May 2021.

The rules for each of these transitional provisions are very detailed and strict. To avoid paying windfall gains tax, a taxpayer must meet all these specific requirements.

Our tax team can provide assistance by guiding you through the intricate legislative requirements for each transitional provision. We’ll work diligently to ensure that you meet all the necessary criteria to secure relief from windfall gains tax.

Compared to other state taxes, the windfall gains tax provisions do not presently contain many exemptions or waivers.

However, there are some exemptions/waivers that apply such as:

• Residential land exemption
• Rezoning errors exemption
• Exemption in relation to land owned by a university

While not strictly an exemption/waiver per se, windfall gains tax also does not apply to an “excluded rezoning” including for example:

• Rezoning between schedules in the same zone
• A rezoning that causes land to be brought within the GAIC (growth areas infrastructure contribution) – this is a fee collected in Melbourne’s expanding suburbs to fund infrastructure development. It is paid when buying or developing a large piece of land.
• The first rezoning after 1 July 2023 of land that was in the GAIC immediately before 1 July 2023
• Rezoning that causes land that was not in a public land zone to be in a public land zone
• Rezoning that causes land that was in a public land zone to be in a different public land zone

If a taxpayer is liable for windfall gains tax, the taxpayer has the option to defer payment of the tax until the earlier of:

• A dutiable transaction occurs in respect of the land, or
• A relevant acquisition occurs in respect of the landholder who owns the land, or
• 30 years after the rezoning event

If a deferral is elected, then the windfall gains tax deferred attracts interest at the prevailing 10-year Treasury Corporation of Victoria bond rate. In such situations, seeking expert legal advice is highly recommended to navigate the complexities of this process and make informed decisions. Our tax team is here to provide the guidance and support you need.

There are 2 main avenues to object to a windfall gains tax assessment:

1. An objection can be made to the valuation of either the CIV1 value, CIV2 value or both CIV1 and CIV2. Importantly, it should be noted that while a taxpayer may elect to only object to either CIV1 or CIV2, the SRO will deem it to be an objection to both CIV1 and CIV2.
2. An objection can be made to any other matter (other than valuation) relating to the imposition of windfall gains tax. This could include the calculation being incorrect or that a exemption/waiver applies.

If you are a landowner or associated professional and need advice regarding the windfall gains tax we have expertise and can provide clarity to an any queries you may have.

Our lawyers have a deep understanding of the law and also the practical expertise of working with the State Revenue Office. We can quickly advise you and provide you with clarity on your obligations.

If there is a dispute regarding the valuation methodology or assessment, we work through methodically to ensure that the assessment is correct.

Speak to one of our experienced windfall gains tax lawyers today on 1300 907 335 to get clarity on your matter.