If you have to pay a growth areas infrastructure contribution (GAIC) in respect of a dutiable transaction or a significant acquisition in a landholder, you may elect to defer all or part of the payment.
For a significant acquisition in a landholder, an election to defer will be taken to have been made by all those who are jointly and severally liable for the payment for that acquisition.
To defer the GAIC, you must lodge your application form within 3 months of the GAIC event taking place. The election to defer will take effect from the time the liability arises until the next GAIC event occurs, or the deferred GAIC, including any indexation and interest, is paid.
Due date for non-deferred GAIC
Any part of the GAIC that is not deferred must be paid by the due date, being 3 months after the liability arises. Failing to do so is a tax default under the Taxation Administration Act 1997 to which interest and penalty tax can apply.
The whole of the GAIC will also become immediately payable as if the election to defer had not been made and interest will apply from what would have been the last day for payment of the whole GAIC amount.
Deferred GAIC amounts
A person liable to pay a GAIC payment in respect of a dutiable transaction relating to land may elect to defer payment if the GAIC liability arose:
- before 30 June 2011:
- up to 100% of the GAIC for type A land if the dutiable transaction occurred before 1 July 2010
- up to 70% of the GAIC in any other case
- on or after 30 June 2011, up to 100% of the GAIC may be deferred on all types of land.
Due date for deferred liability
The deferred liability must be paid on or before the first of the following events:
- The issuing of a statement of compliance relating to all or any part of the land.
- The making of a building permit application relating to all or any part of the land.
Prior to this, a liable person may apply for staged payment approval, enabling the liability to be paid in accordance with that arrangement, subject to approval from the Minister for Planning.
Indexation and interest
Generally, indexation applies from the time the liability arises until the first of the following events:
- It is paid by the due date (i.e. before the issuing of a statement of compliance or making a building permit application).
- The land becomes part of a gazetted precinct structure plan.
After that, the deferred liability, as indexed, is subject to interest until it is paid by the due date or approval is given for a staged payment.
The exception is for liabilities incurred in respect of type A land where the dutiable transaction occurs prior to 1 July 2010. In this case, the deferred liability will be indexed until it is paid or approval is given for a staged payment.
Deferred GAIC indexation
Deferred GAIC is indexed annually at the end of each financial year after the liability has arisen. Indexation is based on the consumer price index (all groups index for Melbourne) and continues until the first of the following events:
- The deferred liability is paid.
- The land becomes part of a precinct structure plan.
- Approval is given for a staged payment.
Interest on deferred GAIC
The interest payable on a deferred GAIC is calculated on a daily basis at the 10-year bond rate.
This rate is the average of the daily yields for the 10-year Treasury Corporation of Victoria bond for the month of May in the financial year preceding the financial year in which the day occurs (for example, average daily yields for May 2021 is the rate to be used for the 2021-22 financial year).
The applicable average TCV 10-year bond rate for the 2024-25 year is 5.1331%.
Deferred GAIC and subsequent dutiable transactions
If the GAIC has been deferred and a subsequent dutiable transaction occurs in relation to the land before it is subdivided or developed, the liability of the person who deferred the liability to pay the deferred GAIC is extinguished.
The deferred GAIC liability together with any indexation and interest (roll-over GAIC), rolls over to the subsequent transferee/s, being:
- The transferee in the case of a land transfer.
- The subsequent purchaser registered on title in the case of a sub-sale.
- All the acquirers and the landholder in the case of a significant acquisition.
If the subsequent dutiable transaction occurs in relation to less than the whole of the interest in the land or in a landholder that owns the land:
- The roll-over liability of the subsequent transferee will be proportionate to that interest.
- The relevant person remains liable to pay or defer the remaining part of the deferred GAIC.
Note: GAIC exemptions do not apply to exempt the subsequent transferee from paying a roll-over GAIC liability.
Due date for roll-over GAIC
The subsequent transferee becomes liable to pay the roll-over GAIC from the time the subsequent dutiable transaction occurs.
To avoid a tax default, the subsequent transferee must, within 3 months of this date, either pay or elect to defer their liability (see below).
Subsequent elections to defer GAIC
The subsequent transferee may elect to defer paying the roll-over GAIC by lodging a completed application form within 3 months of the subsequent dutiable transaction. Such an election to defer would take effect from the time the subsequent transferee’s liability arises, being the date of the subsequent dutiable transaction.
The GAIC may be deferred and rolled over following each subsequent dutiable transaction. There is no limit to the number of time this can happen. However, the roll-over GAIC continues to be subject to any indexation and/or interest, through all succeeding subsequent dutiable transactions relating to the land.
On request from the relevant parties, we will issue a Certificate of Release to the former owner and a Certificate of Subsequent Deferral to the purchaser.
Payment due date for a deferred GAIC liability (subdivision or building works)
The GAIC deferral ends and the liable person must pay the deferred GAIC liability including any indexation and interest before the first of the following events, unless it is an excluded event:
- The issuing of a statement of compliance relating to all or any part of the land.
- The making of a building permit application relating to all or any part of the land.
Alternatively, before this the liable person can apply for staged payment approval. Once granted, the GAIC needs to be paid in accordance with that arrangement.
Note: Neither an excluded subdivision of land nor excluded building works will extinguish the GAIC liability or end the deferral. In the event of an excluded subdivision, the deferred liability will be apportioned between the child lot(s) in proportion to their area.
Payment of GAIC on public purpose land subdivisions
If land subject to a deferred GAIC liability is subdivided solely to provide land for a public purpose, the issue of the statement of compliance for the lot will trigger a liability to pay GAIC, but only in respect of the public purpose land. The GAIC liability is not imposed in respect of the remaining part of the land, and will be triggered at the next GAIC event.
Public purpose land is land specified in a plan of subdivision as being a lot, parcel or other area of land for public purpose, such as land provided for transport infrastructure and utility installation, open space and community facilities.
Payment of the GAIC or deferred liability for the public purpose land must be made in full within 3 months of the issue of the statement of compliance relating to the plan of subdivision. This liability cannot be deferred or discharged under a staged payment arrangement.
Once the liability on that land is paid, the GAIC recording against the public purpose land will be removed, allowing any public authority that subsequently acquires the land to acquire it free from any GAIC encumbrance.
More information on public purpose subdivisions
Default on deferred GAIC
Failing to pay the deferred or roll-over GAIC and any accrued interest by the due date is a tax default under the Taxation Administration Act 1997 (TAA) to which interest and penalty tax may apply.
The deferred GAIC will become immediately payable as if the deferral or a subsequent deferral, had never been made and interest will apply form what would have been the last day for paying the whole GAIC amount. Penalty tax may also apply.
In the case of a subsequent deferral, interest and penalty tax will apply to the amount of the roll-over GAIC for which the subsequent transferee becomes liable.
Unpaid deferred GAIC becomes a charge on land
Deferred GAIC, including roll-over GAIC and any applicable interest not paid by the due date, is a charge on the land in respect of which the GAIC is imposed and the Commissioner may register that charge.
The charge will only be removed when the outstanding amount is fully paid, or the liability to pay the GAIC in respect of the GAIC event is extinguished.
Land ceasing to be in a contribution area
If land, which has a deferred or roll-over GAIC liability attached to it, ceases to be in the contribution area within 3 years of the GAIC liability arising from the first dutiable transaction relating to the land, the liability is extinguished in relation to the land.
If a person has paid a non-deferred amount of the GAIC in respect of land that ceases to be in the contribution area, the person can apply for a refund.
