With a new financial year comes a new property tax in Victoria. The Windfall Gains Tax came into effect on 1 July 2023, with significant implications for the Victorian real estate and construction sector.

What is the Windfall Gains Tax?

The Windfall Gains Tax (WGT) is a property tax which applies to certain land rezoned, where the rezoning results in a taxable value uplift of more than $100,000. 

A rezoning is an amendment of a planning scheme under the Planning and Environment Act 1987, which causes land to be in a different zone from the one it was in immediately before the amendment. It does not include a rezoning between schedules in the same zone. For example, a change from Neighbourhood Residential Zone Schedule 1 to Residential Growth Zone Schedule 2 would be considered a rezoning.

What does the WGT mean for the real estate and construction sector?

The implementation of the WGT poses a wide range of issues for landowners and developers alike, including:


While there is the option to defer the WGT liability, developers must be mindful of cashflow considerations given that the sale of the property will cease the deferral, upon which the WGT becomes payable within 30 days.

Price uncertainty

A rezoning may take several years. As such, forecasting capital improved value of the land before (CIV1) and after the rezoning takes effect (CIV2) for modelling purposes may prove challenging


From a purchaser’s perspective, development agreements will likely become more important in order to manage the WGT liability. There may also be an increased use of ‘Gross Up’ clauses to pass on any WGT liability to a purchaser, which would increase the purchase price and result in a greater stamp duty liability.

No concessions for internal restructures

Intra-group transfers of property can cause the 30-day deferral to cease.

Interactions with GAIC land

GAIC land can be subject to WGT, but not on the first rezoning. Any second or third rezoning will be subject to WGT.

Navigating the issues posed by the WGT can be challenging without the right guidance. Here, we discuss the details to be mindful of when considering the WGT. 

How is the Windfall Gains Tax calculated?

The WGT is calculated on the taxable value uplift of land. The taxable value uplift is the difference between the capital improved value of the land before (CIV1) and after the rezoning takes effect (CIV2). Where a rezoning of land results in a taxable value uplift, the following tax rates apply:

  • More than $100,000 but less than $500,000: a marginal rate of 62.5 per cent will apply on the uplift more than $100,000
  • More than $500,000: a rate of 50 per cent will apply to the total uplift

No deductions are allowable to reduce the taxable value uplift.

Who is liable for paying the Windfall Gains Tax?

If land is rezoned, the owner is responsible for paying the WGT. If the land is owned by multiple parties, each party is jointly and severally liable for the WGT. 

In addition, where multiple parcels of land owned by the same person or group of persons are rezoned, the WGT liability will be assessed on an aggregated basis so that the benefit of the $100,000 threshold is applied only once.

When is the Windfall Gains Tax payable?

The liability for WGT arises at the time the rezoning of land occurs. Owners of land liable to pay the WGT will be issued an assessment notice from the Victorian State Revenue Office which is typically due 30 days after the assessment date.

Owners may elect to defer payment of the WGT liability until the earlier of 30 years after the rezoning or the date of the next dutiable transaction or relevant acquisition concerning the land (noting certain dutiable transactions and relevant acquisitions will not cease deferral). If the deferral ceases, the full payment must be made within 30 days.

Unpaid or deferred WGT will constitute a first charge on the relevant land. Property clearance certificates can be requested by an owner, a genuine purchaser or a mortgagee of land. These will show any unpaid windfall gains tax liabilities on a land or give notice of any undetermined liabilities.

Are there any exemptions available for the Windfall Gains Tax?

There are several exemptions or exclusions from WGT, including:

  • Residential land exemption
  • Land entitled to a transitional exemption from WGT
  • Land rezoned to or from the Urban Growth Zone within the Growth Areas Infrastructure Contribution (GAIC) area
  • Charitable and university land
  • Land rezoned to Public Land Zones
  • Land rezoned to correct an obvious or technical error in the Victoria Planning Provisions or a planning scheme
  • Land rezoned to a Rural Zone (other than the Rural Living Zone)

Can you object to a WGT assessment?

Where an owner disagrees with a WGT assessment, they can lodge an objection within 60 days of the assessment in respect of either:

  • The CIV1 or CIV2 of the land; or
  • The imposition of the WGT itself.

The Commissioner has no discretion to extend the 60-day time limit for lodging an objection. 

If the CIV is specified in a rates notice, the owner can apply for an objection with the local Council.

If you require assistance regarding how the WGT may affect your development plans, please get in touch with our State Taxes experts. For further information on the changes, please get in touch.

Preparing for the Windfall Gains Tax – Victoria’s newest property tax
Preparing for the Windfall Gains Tax – Victoria’s newest property tax
Thu, March 16, 2023
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