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Rezoning? Beware of Windfall Gains Tax!

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By: Linda De Villiers, Lawyer

Windfall Gains Tax (‘WGT’) introduced by Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021 No. 52 of 202 (‘Act’) commences on 1 July 2023. It is a significant tax and applies to most land in Victoria that is rezoned from 1 July 2023 (other than excluded rezonings).

What is Windfall Gains Tax?

WGT is a tax payable by the owner of land when land is rezoned resulting in a taxable value uplift to the land of more than $100,000. All land owned by a person/group and subject to that rezoning is used to determine the taxable value uplift.

What is rezoning?

The Act defines ‘rezoning’ as “an amendment of a planning scheme that causes land to be in a different zone from the zone that it was in immediately before the amendment.” Changes between schedules within the same zone are not considered a rezoning.

Example: A change from a Neighbourhood Residential Zone Schedule 1 to a Neighbourhood Residential Zone Schedule 2 is not captured whereas a change from a Neighbourhood Residential Zone 1 to a Residential Growth Zone Schedule 2 is captured.

How is Windfall Gains Tax calculated?



multiplied by RELEVANT WGT RATE

The taxable value uplift is the difference between the Capital Improved Value (CIV) of the land immediately before and after the rezoning. (Taxable Value Uplift = CIV2 – CIV1)

Section 12 (a) and (b) of the Act states as follows:

“(a) CIV1 is the capital improved value of the land contained in the valuation in force under Part II or IIA of the Valuation of Land Act 1960 (as the case may be) immediately before the WGT event occurs; and

(b) CIV2 is the capital improved value of the land contained in a supplementary valuation under Part IIB of the Valuation of Land Act 1960.”

At this stage the government has stated it will not prescribe any allowable deductions. This has been criticised by developers who are unable to claim deductions for rezoning costs to offset the cost of WGT.

The Relevant WGT Rate is outlined in Section 9 of the Act as follows:

Taxable Value Uplift: Rate of windfall gains tax


Not more than $100,000


More than $100,000 but less than $500,000 62.5% of that part of the taxable value uplift that exceeds $100,000.


$500,000 or more 50% of the taxable value uplift (flat rate)



Land zoned Industrial 1 Zone is purchased in 2015 for $250,000. In 2025 this land is rezoned to Neighbourhood Residential Zone. The Capital Improved Value (CIV1) immediately before the rezoning was $400,000. The valuer general conducts a supplementary valuation on the basis of the land being rezoned to Neighbourhood Residential Zone and determines the Capital Improved Value (CIV2) to be $600,000.

The taxable value uplift in this scenario is $200,000, being the difference between CIV2 and CIV1. As there are no allowable deductions, the WGT payable will be $62,500. (62.5% of the value uplift above $100,000)

When is Windfall Gains Tax payable?

Liability is triggered at the time of rezoning. The Commissioner of State Revenue issues a WGT Notice of Assessment to the landowner with a due date for payment. The Landowner will then have 2 options:

  1. to pay by the due date on the Assessment (within 30 days from the issue of the Assessment); or
  2. elect to defer payment of all or some of the WGT liability until the next dutiable transaction (or relevant acquisition) occurs or 30 years after the rezoning event, whichever occurs first.

What rezonings are excluded?

  1. Residential land including primary production land with a residential building on it up to 2 hectares. The State Revenue Office must be satisfied that the land is used primarily for residential purposes (with a carve out for primary production land)
  2. First Rezoning after 1 July 2023 to the Urban Growth Zone of land that was in a GAIC area.
  3. Rezoning to a public land zone or between public land zones.
  4. Rezoning to correct an obvious or technical error in the Victoria Planning Provisions or a planning scheme.
  5. Rezonings underway before 15 May 2021 (when WGT was first announced). For example, a contract entered into before 15 May 2021 may not be subject to WGT provided no contract terms are amended after this date and the land is not transferred before the rezoning.
  6. Charitable and university land.
  7. Land rezoned to a Rural Zone (other than the Rural Living Zone)

Key take-aways

  • If you are considering rezoning your land, you should beware of the possible significant WGT liability.
  • Vendors may consider transferring any WGT liability arising from the sale to a purchaser by way of a special condition. Purchasers should be on alert for such special conditions.
  • Landowners must ensure that if they elect to defer payment of WGT, urgent steps are taken to do so on or before 30 days from the issue of the assessment as there is no allowance for extension of time for payment/payment by instalments.
  • Landowners wanting to object to a WGT assessment must do so within 60 days of the issue of the assessment.

The MST Property team remain available to assist you with any windfall gains tax queries or any other property matters. Please contact Linda De Villiers, Lawyer on (03) 8540 0246 or Evelyn Marcou, Principal on (03) 8540 0243.