20 May 2021

Developers beware – Victoria to introduce a windfall gains tax

By keshni maharaj, michelle pham

As part of the 2021 budget to be delivered on 20 May 2021, the Victorian Government has announced that it plans to introduce a new windfall gains tax on profits made by landowners where those profits are made as a consequence of planning decisions to rezone ex-industrial land, or create new residential estates.

The Victorian Government is expected to introduce legislation under which landowners (mostly developers) will face a windfall gains tax of up to 50% that will be applied to planning decisions to rezone land. These measures are set to apply from 1 July 2022.

The total value uplift from a rezoning decision will be taxed at 50% for windfalls above $500,000, with the tax phasing in from $100,000.

Exceptions will apply for instance to land subject to the Growth Areas Infrastructure Contribution.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.