The Victorian Government has continued with its intention to introduce a new windfall gains tax (WGT) in respect of gains made by landowners arising from increases in land value following rezoning of land. Following consultation with stakeholders, further details about the value mechanism and rezoning and transaction exemptions have been announced.


  • the tax will apply from 1 July 2023
  • the tax applies to value gains over $100,000, with a taxable rate of 62.5% of value uplift between $100,000 and $500,000, and a taxable rate of 50% applying to value gains above $500,000
  • the tax will be based on value uplift measured at the time of rezoning on a Capital Improved Value basis
  • options to defer payment of WGT (with interest) are available
  • exemptions apply to certain types of land, including for rezoning commitments before 15 May 2021, contracts for sale before 15 May 2021, certain residential land and land subject to GAIC

How will the WGT be calculated?

Under the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Bill 2021, introduced into Parliament on 12 October 2021 (Bill), a landowner will become liable to pay WGT on the ‘taxable value uplift’ of land when it is rezoned. The tax is calculated as the difference between the capital improved value of the land (as valued by the Valuer-General) immediately before and after the rezoning, minus any deductions prescribed by regulations. The Bill is silent on, among other things, whether the impact of the WGT on the market value of land should be factored into the valuations.

At the date of this article, no regulations have been published, although it is hoped that they will include deductions for costs incurred by land owners in achieving the value uplift. The Bill provides that the regulations may be of general or limited application, or may differ according to differences in time, place or circumstances – this would indicate that the regulations may be developed in a general and/or site-specific manner.

Grounds for objection

The legislation sets out a process for landowners to object to the pre and post-rezoning valuations if they believe the valuations are not reflective of their property value.

Tax rate

A tax-free threshold of $100,000 will be applied to ensure only landowners experiencing a significant uplift will be impacted.

Value uplift Taxable payable
<$100,000 $0
$100,000 to <$500,000 62.5% of uplift above

$100 000

$500,000 and over 50% of total uplift

WGT is assessed on all land owned by a taxpayer on an aggregated basis. Consequently, the $100,000 tax-free threshold cannot be used in respect of each separate title. Similarly, if land subject to a WGT event is owned through joint, trust or group structures (which include related corporations or trusts), the applicable WGT is apportioned to each title according to the aggregate taxable value uplift of the land.

In most circumstances, any unpaid WGT (including any interest and penalties) will be a first charge on the land on which the WGT is payable. This charge has priority over all other encumbrances and may, therefore, impact the raising of finance from financiers.

It will be important for landowners and developers to ensure appropriate structures are in place, having regard to the application of the WGT.

Timing and deferral of payment

After the legislation commences on 1 July 2023, a landowner becomes liable to pay WGT at the time of rezoning (being the gazettal of a planning scheme amendment), but may choose to defer payment until the next dutiable transaction, the next relevant acquisition or after 30 years, whichever occurs first. Any deferral, is however, subject to interest, calculated daily at the 10-year-bond rate. As at 31 August 2021, the rate was 1.52 per cent. Landowners in non-GAIC areas should seek to progress any rezonings as soon as possible, before 1 July 2023. This would include those areas finally developed within ‘holding’ zones, such as the Urban Growth Zone, Special Use Zone or Comprehensive Development Zone.


Exemptions will apply for rezonings to:

  • public land zones
  • rural zones (other than the Rural Living Zone)
  • land subject to the Growth Area Infrastructure Contribution
  • residential land up to 2 hectares that includes a dwelling fit for occupancy (including investment properties and holiday homes)
  • land for charitable uses (provided the land continues to be used for charitable purposes for the next 15 years)
  • land subject to a contract of sale entered into before 15 May 2021, that has not been completed by the transfer of land before the rezoning
  • land subject to an option to enter into a contract of sale granted before 15 May 2021 that has not been exercised, and the contract of sale to which the option relates has not been contemplated before the rezoning occurs (provided the terms of the contract of sale were settled at the time the option was granted)

The Government will also exempt rezonings that, as at 15 May 2021 (being the Government announcement of the WGT), are already considered well-progressed. This includes:

  • a planning scheme amendment prepared by a local council that has already been allocated an amendment tracking number by the Department of Environment, Land, water and Planning; or
  • a planning scheme amendment that was prepared by, or at the request of, the Minister for Planning and the landowner has already paid for the costs associated with the rezoning before the 15 May 2021 (being the lesser of $100,000 or 1% of the pre-rezoning valuation). Importantly, for this exemption to apply, the Bill provides that the landowner must have approached the Minister for Planning to request the rezoning. This would indicate that rezonings which apply to large precincts (for example, those undertaken by the Victorian Planning Authority) would not be exempt.

Interaction with other taxes

It is unclear at this time how the WGT will interact with other taxes, such as land tax and capital gains tax (CGT) and what (if any) impact the WGT may have on these. The supplementary (post-rezoning) valuation may be used to adjust municipal rates or fire services levies.

Next Steps

If you have any questions on the proposed WGT, please phone or email the key contacts below.

by David Sinn, Jane Hodder & Ellen Tarasenko

David Sinn
David Sinn
Managing Partner, Real Estate (Asia Pacific)
+61 3 9288 1509
Jane Hodder
Jane Hodder
Partner, Melbourne
+61 3 9288 1692
Ellen Tarasenko
Ellen Tarasenko
Special Counsel, Melbourne
+61 3 9288 1575