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“Sneaky” change to Windfall Gains Tax valuation objections

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The 2023-2024 Victorian State Budget was delivered by the Victorian Government on 23 May 2023.

Our article here goes through the various Budget measures that were announced.

As part of delivering the Budget, the State Taxation Acts Amendment Bill 2023 (Vic) (Bill) was introduced into the Victorian Legislative Assembly on 23 May 2023 and gives effect to various measures announced in the Budget.

One measure that appears not to have been announced in the Budget Papers and the Budget speeches is a change to the Windfall Gains Tax regime.

The unannounced changes to valuation objections under the Windfall Gains Tax regime are outlined below. 

Changes to Windfall Gains Tax valuation objections

Currently, when an objection is lodged for a Windfall Gains Tax assessment based on the valuation(s) of the lands, a taxpayer has the right to object to:

  1. The capital improved value of the land as assessed in the supplementary valuation after rezoning (CIV2) and/or;

  2. Any other capital improved value used to assess the tax that was in a valuation made under the Valuation of Land Act 1960 (Vic) – ie the valuation of the property at the start of the year it is rezoned (CIV1).  

Under the unannounced changes introduced in the Bill, the provisions under the Taxation Administration Act 1997 (Vic) (TAA) and the Valuation of Land Act 1960 (Vic) are proposed to be amended to provide the Valuer-General the ability to amend both valuations (ie CIV1 and CIV2) even if a taxpayer has only lodged an objection to only either CIV1 or CIV2.

In addition, the provisions relating to the grounds of objection in the TAA are also amended such that even if a taxpayer only objects to one of the valuations, any valuation objection is taken to be an objection to both valuations (ie CIV1 and CIV2).

Consequences of changes to Windfall Gains Tax objections

These changes, assuming they’re enacted, will result in less flexibility for taxpayers and will enable the SRO and Valuer General to adjust the CIV1 or CIV2, even where the taxpayer has not objected to that value.

This will no doubt increase the number of disputes in relation to Windfall Gains Tax and increase the costs and stress to taxpayers in relation to Windfall Gains Tax assessments.

What to do now

At the day of writing, the introduction of the Windfall Gains Tax measure is just weeks away, therefore, taxpayers with land likely to be rezoned in the coming months or years, could consider the following:

  • Objecting to the Council’s capital improved value – if taxpayers believe that value is too low (ie to increase CIV1);

  • Examining whether exemptions apply; and

  • If selling land prior to rezoning, consider dealing with Windfall Gains Tax in sale contracts.

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If you have any questions in relation to the changes to the Windfall Gains Tax regime, the Budget announcements or any state taxation matter, please contact our state taxes specialist team:

Thomas Abraham
Senior Associate
M +61 401 387 451 | T +61 3 9611 0178
E tabraham@sladen.com.au

Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163
E: pbroderick@sladen.com.au

Phil Broderick