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Changes to Victorian Land Tax and Windfall Gain Tax (WGT)

On 12 December 2023, the State Taxation Acts and Other Acts Amendment Act 2003 received royal assent on 12 December 2023. From 1 January 2024, new laws change how Land Tax and Windfall Gains Tax are treated in Contracts of Sale of land in Victoria.

Land Tax

In Victoria, land tax is evaluated for a specific calendar year against the landowner as of midnight on December 31st of the preceding year. Therefore, when land tax is settled, it is generally regarded as a prepayment for the upcoming year. When land is sold, it is customary to adjust the land tax liability for the year of sale between the vendor and the purchaser.

However, starting from 1 January 2024, the Sale of Land Act 1962 and Property Law Act 1958 is amended so that vendors under a sale contract valued at less than $10 million can no longer transfer their land tax liability to the purchaser at settlement. Properties sold for $10 million or more are exempt from this regime which means that vendors under a sale contract valued at more than $10 million can still transfer their land tax liability to the purchaser at settlement.

Contracts executed before 1 January 2024, remain unaffected by this new regime, and the land tax adjustment clauses in those contracts remain enforceable. This new regime will significantly impact vendors as they will be required to settle any outstanding land tax debts prior to settlement. These changes will particularly affect vendors with substantial land tax liabilities, increasing their costs.

Windfall Gains Tax (WGT)

A WGT is imposed when land undergoes rezoning, resulting in an increase in its capital improved value exceeding $10,000.00. While WGT assessments typically follow rezoning, the liability can be postponed until the land is sold next (including via direct acquisition by a landholder) or for up to 30 years if no sale occurs.

It has become customary for land sale contracts involving WGT to contain a clause obligating the purchaser to make a payment toward the vendor’s WGT liability.

However, starting from 1 January 2024, the Windfall Gains Tax Act 2021 is amended so that this is no longer be permissible. Vendors under a sale contract or option agreement, who have had WGT assessed before the contract is made, cannot transfer their WGT liability to the purchaser at settlement.

Moreover, including such a clause in a land sale contract (or an option to enter into one) is now considered an offense punishable by a fine of up to 300 penalty units. This new regulation does not affect contracts entered into before 1 January 2024, or contracts executed upon the exercise of an option granted before that date.

Parties who enter into a land sale contract should consider whether these changes affect the transaction and any special conditions they may require in the sale contract. For more personalised advice regarding how the new regime will affect you, please contact our people.

Ron Zucker 0410 590 111

Eollyn Cortes 0478 727 395

Sagang Chung 0431 435 333

Julia Zou 0426 670 202


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