Applies when land value increases due to rezoning.
Windfall gains tax basics
Windfall gains tax is payable when land value increases by more than $100,000 due to government rezoning. It started on 1 July 2023.
The taxable value uplift is the difference in the capital improved value (CIV) of the land before and after the rezoning takes effect. The Valuer-General Victoria determines the value of the land.
The tax does not apply to some types of land, including residential land up to 2 hectares, land owned by charities and land rezoned to certain public or rural zones. Charities can receive a waiver if they use the land for charitable purposes for 15 years. If they change the use or sell the land before then, the tax applies.
The tax is charged when the land is rezoned, not when the land is sold or developed. The person who owns the land when it is rezoned is responsible for paying the tax. You can defer paying the tax until the land changes hands or for 30 years. If the tax is not paid, we record the debt against the land. This debt must be paid before the property can be sold. A property clearance certificate shows any unpaid tax recorded against the land.
Zoning changes
Windfall gains tax applies when land is moved from one zone to a different zone under the Victoria Planning Provisions (Clauses 32 to 37). Not all planning changes count as rezoning for tax purposes. If the land stays in the same zone but moves to a different schedule, it is not considered rezoning.
For example:
- A change from Neighbourhood Residential Zone Schedule 1 to Residential Growth Zone Schedule 2 is a rezoning and may trigger the tax.
- A change from Neighbourhood Residential Zone Schedule 1 to Neighbourhood Residential Zone Schedule 2 is not a rezoning and does not trigger the tax.
Land can be rezoned in different ways. You may request a rezoning through your local planning authority, or it may happen as part of a broader change to the area led by a planning authority.
A rezoning takes effect when it is approved by the Minister for Planning and published in the Victorian Government Gazette. If the notice sets a different start date, the rezoning begins on that date.
If you are unsure whether your land may be rezoned, contact your local planning authority for advice.
Learn more about planning authorities.
Rates and calculations
Two tax rates apply depending on the amount of uplift:
- 62.5% applies to uplifts between $100,000 and $500,000 but only the amount above $100,000 is taxed.
- 50% applies to uplifts of $500,000 or more and the full amount is taxed.
For example:
- A $400,000 uplift results in $187,500 tax. We tax $300,000 (the amount above $100,000) at 62.5%.
- A $600,000 uplift results in $300,000 tax (50%). We tax the full amount at 50%.
If a person or group owns more than one piece of land that is rezoned at the same time, the uplift is added together to work out the tax. Any reductions in land value are ignored when calculating uplift.
Joint owners are assessed as if the land were owned by a single landowner.
Grouping rules apply to related companies, trusts and joint owners. These rules ensure the tax is calculated on the total uplift across all land owned by the group under the same rezoning.
Grouping applies when:
- companies are related or have the same controlling shareholders
- trusts are related through common control or shared entitlement to income or capital
- a person or group controls both a company and a trust.
You must notify us if:
- you represent a company or trust that is part of a group
- another group member owns rezoned by the same planning scheme amendment
- that land is not included in your assessment.
Payment and deferral options
If you need to pay windfall gains tax, we will send you an assessment notice. This notice includes the amount of tax and the due date for payment. Learn more about how to pay your windfall gains tax assessment.
You can choose to defer payment until:
- the next dutiable transaction or relevant acquisition
- 30 years after the rezoning.
Payment is due within 30 days of one of these events. Interest is added while the tax is deferred.
If the land is subdivided, the deferred tax is split across the new lots. The deferral continues for each child lot and doesn’t reset.
Some transactions may not end deferral. Learn more about deferring windfall gains tax.
Exemptions and exclusions
Windfall gains tax does not apply to some land and rezoning types.
Common examples include:
- residential land up to 2 hectares
- land owned by charities or universities
- land rezoned to public land zones or rural zones
- land affected by technical zoning corrections
- land entitled to a transitional exemption.
Some exemptions apply automatically, like those for residential land and certain rezoning types. If you believe a relevant exemption has not been applied to your assessment please contact us. Others, including exemptions for charities, universities and transitional cases, require an application and supporting evidence.
Learn more about exemptions and exclusions.
Valuations and objections
CIV is the total market value of the land and any improvements, based on the most recent general valuation. It is calculated by the Valuer-General Victoria and also used for council rates and other taxes.
After a rezoning, the Valuer-General provides another valuation. This assesses the land’s value as if the new zone applied at the time of the last general valuation. The uplift is the difference between this supplementary valuation and the original general valuation. This captures only the change in value from rezoning, not market movements or future improvements.
If you disagree with the valuation or the windfall gains tax assessment, you can lodge an objection.
- Objections to the land valuations must be received within 2 months of the issue date of your assessment and are referred to the Valuer-General for review. Learn more about objecting to a land valuation.
- Objections to the tax assessment such as liability, exemptions or grouping must be lodged with us within 60 days of the assessment issue date. Learn more about updating your windfall gains tax assessment.
Buying, selling and property clearance
Windfall gains tax can affect both buyers and sellers. If the tax is unpaid, we record the debt against the land. This debt must be paid before the property is sold.
Buyers can request their own property clearance certificate to check if any tax is owing. The certificate protects the buyer from paying more than the amount shown on it.
There are rules that affect contracts of sale where there is a known windfall gains tax liability or an undetermined objection.
Read more about buying and selling land subject to windfall gains tax.
