A new tax, called the ‘windfall gains tax’ (WGT), applies to most land in Victoria that is rezoned after 1 July 2023.  The WGT is specific to Victoria.

The WGT is unlike Capital Gains Tax (which is a federal tax).  It is a new tax being imposed on Victorian landowners if their land is rezoned after 1 July 2023.  If you are a landowner in Victoria, the land you own is rezoned and the rezoning results in the value of your land increasing, you may be taxed on the “value uplift”. (i.e. on the difference of the land value between a property’s capital improved value pre-zoning and its capital improved value post the rezoning.

Background to the WGT

The Victorian Government announced the WGT on 15 May 2021 as part of Victoria’s State Budget.  

The Victorian Treasurer explained the new tax in the following way:

“When land is rezoned to expand its permitted uses and economic potential, it can result in immediate and significant increases in land value.  This increase in land value is a windfall gain that accrues solely to the landowner over and above any regular income or profits earned from the land….

….Taxing windfall gains allows a share of the private economic benefits from the rezoning to be captured as a revenue stream, in an efficient and equitable way, so that the benefits of such a windfall can be returned to the community through greater Government investments in services and infrastructure.” 

How is WGT calculated?

If your property is rezoned and the value uplift is under $100,000, no WGT is applied.  However, if your value uplift is above $100,000, the taxable rate is calculated as follows:

  • For value uplifts from $100,001 - $499,999, at a taxable rate of 62.5% on the value of the uplift that exceeds the $100,000 tax free threshold.  The $100,000 tax free threshold only applies to a maximum uplift of $499,999, otherwise the following applies:
  • For $500,000 or more value uplift after the rezoning, the taxable rate is 50% of the total value uplift.

Who is liable for the WGT liability?

  • The owner or owners of the land;
  • Land held on Trust – Trustee;
  • Land held by a company, corporation, or Trusts.

How will I know if my property is affected?

Landowners will receive a notice from the Victoria State Revenue Office (“SRO”) shortly after the rezoning has taken place to advise them of the “taxable uplift value” and the WGT amount due.  The due date for payment is expected to be 30 days from the date of the notice of assessment.

Cashflow implications

A rezoning which may trigger the obligation to pay a WGT liability may not necessarily be accompanied by a sale of the rezoned property, potentially producing a cashflow problem for the taxpayer.  

Can I Defer Payment of WGT?

As discussed in our previous blog post, a liability to pay the Victorian government’s new Windfall Gains Tax (‘WGT”) may arise before the rezoned property is sold.  Landowners can defer paying up to 100% of their WGT by giving notice to the SRO before the due date the tax will be payable.  Further points to note are:

  • An election can be made to defer payment of the WGT for up to 30 years.
  • Landowners will be charged interest on the deferred payment.  Interest accrues daily at the 10 year Treasury Corporation of Victoria Bond Rate (currently 4.7%).  The interest charge is calculated daily. 
  • Any unpaid WGT (including any penalties or accrued interest) will be registered as a first charge on the title of the land.  
  • If the WGT is deferred where a plan of subdivision is later registered, the tax liability will be apportioned between the child lots created by dividing the area of each block of land in the subdivision.  This means that the WGT must be paid on any lot which is sold, while the deferral continues on the remaining lots until they are sold.  

When is deferred WGT payable?

The payment of WGT can be deferred for a maximum of 30 years, but the deferral ceases when the landowner sells the property.  Upon sale, the vendor will be responsible for payment of the taxable charge affecting the land unless they transfer any WGT payable to the purchaser by way of a special condition in a Contract of Sale.  

It should be noted that some dutiable transactions will not halt the deferral:

  • A dutiable transaction with no consideration, which could cover the transfer between spouses.
  • A dutiable transaction to an Executor or legal personal representative of a deceased.

Generally, where there is a dutiable transaction that will not halt the deferral, the transferee (for example, an executor of an estate) must choose to assume the WGT tax liability, including any accrued interest, to allow the deferral to continue.  When this occurs, the WGT liability, including any accrued interest, will roll over to the new owner.  A transferee may also choose to halt the deferral.

What if my assessment has an error or I wish to object to the WGT assessment?

Under the act, a landowner must notify the State Revenue Office (“SRO”) of any error or omission in the notice of assessment within 60 days from the date the notice of assessment is issued.

The error may be due to the SRO failing to include additional land which should have been included in the assessment. The landowner should be aware that penalties will apply should they knowingly fail to provide this information.

Landowners may also object to the notice of assessment if they believe that there is an error in the calculation of the uplift value.  The challenge for the landowner will be to provide evidence to support their view of the value of the property’s capital improved value pre and post re-zoning.


Exemptions may apply.  Potentially, there are many.  The main exemption, however, is likely to be for ‘residential land’.  Residential land is defined below:

  • Up to two hectares of land owned by the same owner that has a building erected on it designed and constructed primarily for residential purposes as a place of residence; or
  • Land on which a residence is being constructed or renovated, where the land previously had a residential dwelling.  The land must have been lawfully used as a place of residence before commencement of the construction or renovation; or
  • Land which has a residence that is uninhabitable.