Following the announcement of Windfall Gains Tax (WGT) in the , the legislation to support this measure was introduced into the Victorian Parliament this week. WGT aims to ensure significant land value increases from government rezoning decisions are “shared with the Victorian community” for critical infrastructures, such as public transportation and schools. Despite this statement, there does not seem to be any correlation between the tax collected from a specific community to be used in that community.
The imposition of WGT arises when the rezoning constituting a “WGT Event” takes effect under the Planning and Environment Act 1987 (VIC).
WGT is proposed to be calculated on the “value uplift” of the land, being the difference between the pre-rezoning and post-rezoning value of land. The intention is that any growth in value before or after the rezoning is not captured in the calculation of the WGT. However, many features (not just rezoning) could influence a change in value, and this approach might not properly isolate the value uplift by reason of rezoning alone.
The table below sets out the WGT rates:
|$100,000 - $499,999||62.5% of uplift above $100,000|
|$500,000 and over||50% of total uplift|
The commencement date has been postponed from 1 July 2022 to 1 July 2023.