Windfall Gains Tax

Windfall Gains Tax is now law

06 December 2021

The Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021 (the Act) received Royal Assent on 30 November 2021.

From 1 July 2023, landowners will become liable to windfall gains tax (WGT), where a government rezoning results in a ‘taxable value uplift’ to their land of more than $100,000.

The taxable value uplift is the difference in the capital improved value (CIV) of the land before and after the rezoning takes effect, less any deductions. The Valuer-General will be responsible for determining the value of the land before and after a rezoning, based on the CIV of the relevant land.

Under transitional arrangements, certain rezonings are excluded from WGT, including proponent-led rezonings which were underway before 15 May 2021, as well as rezonings of land which were subject to a pre-existing contract of sale or option arrangement entered into before 15 May 2021.

For further detail regarding the WGT, please refer to our earlier alert available here.

Other amendments

The Act introduces the following additional measures:

  • Land tax concessions for the build-to-rent (BTR) sector. Eligible BTR developments are entitled to a 50% reduction on the taxable value of land for up to 30 years. Such land is also exempt from the Absentee Owner Surcharge during that time. Broadly, an eligible BTR development comprises new or substantially renovated buildings constructed for the purpose of providing dwellings for lease under residential tenancy agreements. The buildings must provide at least 50 self-contained dwellings which are offered for a lease term of at least three years to the general public. The dwellings must have an occupancy date on or after 1 January 2021 and before 1 January 2032.
  • The land tax exemption for not-for-profit non-racing clubs (section 73A, Land Tax Act 2005) has been amended. From the 2022 land tax year, the exemption is no longer available to gender-exclusive clubs and certain gender-restrictive clubs. The Commissioner of State Revenue may reinstate the exemption if the club can demonstrate that its purposes are consistent with community interests or that it is genuinely inclusive of members of any sex or gender identity.

If you have any questions regarding the above measures, please do not hesitate to contact our Tax team.

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