Transitional exemption before May 2021

Key information

Windfall gains tax was announced on 15 May 2021. Where there is an owner-led rezoning, the owner may be entitled to an exemption from windfall gains tax. 

The owner must demonstrate that before 15 May 2021:

• they approached the council or Minister for Planning to request the rezoning
• they incurred significant costs for that rezoning
• they met one of these conditions:
  • the rezoning request was prepared and registered by a council before 15 May 2021, or
  • the Minister for Planning had agreed to prepare the rezoning as the responsible planning authority, or
  • the Minister had authorised another person to undertake the amendment as the planning authority before 15 May 2021.

This exemption does not apply to any subsequent purchaser of the land. 

To apply for this exemption, please email windfallgainstax@sro.vic.gov.au.

Acting on the owner’s authority

If a person pursues a rezoning with a council or the Planning Minister on behalf of a land owner, this is considered an owner-led rezoning for this exemption. The land owner must demonstrate the person was acting with their authority.

Definitions of key terms

Registered by a council

For an owner-led rezoning through a council to have been registered, the rezoning must have obtained a number within the Amendment Tracking System. This number is sometimes called a ‘C’ number.

Significant costs for a rezoning

Significant costs are costs that have been paid or incurred before 15 May 2021 to progress the rezoning.

These costs are defined in the legislation to include either:

• “relevant costs”, meaning costs payable under regulation 6, 7 or 8 of the Planning and Environment (Fees) Regulations 2016, or
• “relevant work”, meaning professional analysis or assessment that, in the Commissioner's opinion, is necessarily performed in preparing for or seeking a rezoning of land.

Examples of relevant work include:

• surveying analysis
• engineering analysis
• traffic analysis
• master planning analysis
• Aboriginal cultural heritage assessment
• architectural analysis
• environmental analysis.

Significant costs do not include works done to the land itself, such as remediation and land clearing.

The owner must demonstrate they incurred costs above the threshold, which is the lesser of: 

• 1% of the land’s pre-rezoning capital improved value, or
• $100,000.

Contracts and options entered into by 15 May 2021

Windfall gains tax is not imposed on land that is rezoned if the land is subject to a contract of sale entered into before 15 May 2021 that has not been completed by the transfer of the land before the rezoning occurs.

Land is also exempt if it is subject to an option to enter into a contract of sale granted before 15 May 2021, but that option:

• has not been exercised before the rezoning occurs, or 
• has been exercised but the contract to which the option relates has not been completed before the rezoning occurs.

The terms of the contract of sale must have been settled at the time the option was granted. Options such as a right of first refusal are not sufficient.

Development agreements

There is no exemption for land owners who entered into a development agreement before 15 May 2021.

But a transitional exemption may apply if the land owner can demonstrate the developer took any actions with their authority to request the rezoning or incur significant costs to progress the rezoning before 15 May 2021.

Rezoning restarted

If a rezoning request does not proceed, any new application that restarts the process is a new application and is not exempt. It is not considered a continuation of the original request.