Windfall Gains Tax (WGT) is a tax on a 'value uplift' that arises as a result of a rezoning of Victorian land.
Overview
Main legislation
Windfall Gains Tax Act 2021 (Vic)
Taxation Administration Act 1997
(Vic) (which contains provisions for the administration and enforcement of Victoria's taxation laws)
Valuation of Land Act 1960 (Vic)
More specifically, the value uplift is the increase in the land’s Capital Improved Value (CIV) resulting from its rezoning. The revaluation is completed by the Value General. For an uplift of more than $100,000 but less than $500,000: the tax will apply at a rate of 62.5% on the uplift above $100,000. For uplifts of $500,000 or more: a tax rate of 50% will apply to the total uplift.
The owner of the land at the time of the rezoning is liable to pay the tax and can generally elect to defer payment. The deferral period is up to 30 years, however a deferral will come to an end earlier in the case of a transfer of the land or various other specified events occurring (e.g. a landholder duty event occurring in respect of the company or unit trust in which the land is held). Deferred payments accrue interest.
More info on Windfall Gains Tax
Actions to reduce risk
- Look for the tax and duty implications associated with the transfer of real property and associated transactions (like share transfers) to alert clients and, if appropriate and required, provide advice or direct the client to seek expert advice.
- Read the guidance and the information provided to improve your understanding and awareness.
- Identify complexities beyond your expertise and refer clients for expert advice.
- Use a checklist or prompt at the start of a matter to identify tax and duty issues.
- Always check the details in the legislation and SRO guidelines before advising clients and keep records to confirm any advice given.
- Establish, update and maintain comprehensive advice letters and resources that you can adapt for each specific client matter to ensure relevant advice is given to clients and confirmed in writing.
- Maintain a focus on tax and duty in all property and property conveyancing matters.
