• GAIC changes mooted in State Taxation Amendment Bill

    2016-10-18

    GAIC changes mooted in State Taxation Amendment Bill

    On Thursday 13 October, the Victorian Government released the State Taxation Acts Further Amendment Bill 2016, which amends the Land Tax Act 2005, Payroll Tax 2007, Planning and Environment Act 1987 and the Valuation of Land Act 1960.
     
    Of particular interest is the amendments to the Planning and Environment Act 1987, which applies the Growth Areas Infrastructure Contribution (GAIC) to land subdivided for public purposes. In addition to some more minor administrative changes, the most significant components of the amendment includes:
     
    Repeal of Section 201RF(a) and (b) of the Planning and Environment Act 1987. Currently, this section allows the subdivision of land which is solely to create a lot for utility installation or for transport infrastructure or any other public purpose to be exempt from GAIC.
     
    Amendment to 201S reaffirms the State Government’s intention to apply GAIC to land subdivided for public purposes specifying that if the GAIC event triggered is a subdivision for public purposes the balance land is not triggered.
     
    The amendment includes the following example:
     
    • The owner of land in the contribution area applies to subdivide the land for the sole purpose of providing for the construction of a road. The issue of the statement of compliance relating to the plan of subdivision of land is a first GAIC event to the extent that the plan relates to public purpose land. A GAIC is imposed under subsection (1) and is payable under section 201SL within 3 months after the date of issue of the statement of compliance. The amount of the GAIC is calculated under section 201SG by reference to the area of the public purpose land. A GAIC is not imposed under subsection (1) on the issue of the statement of compliance to the extent that the plan of subdivision relates to the balance land. A GAIC will be imposed on the next GAIC event that occurs in relation to any part of the balance land.
     
    Introduction of Section 201SPAA which specifies the timing for payment of apportioned and deferred GAIC on public purpose land subdivision. The example of how this section works, is provided below:
     
    • ABC Pty Ltd purchases 15 hectares of land in the contribution area in June 2017. The dutiable transaction in relation to the land is the first GAIC event in relation to the land and a GAIC is imposed. ABC Pty Ltd is liable to pay the GAIC and elects under section 201SM to defer 100% of the amount payable. In December 2017, ABC Pty Ltd applies to subdivide the land for the sole purpose of providing 1·5 hectares of land for the construction of a road. On the issue of the statement of compliance relating to the plan of subdivision of land, the GAIC is apportioned between the two child lots based on the area of land each child lot bears to the parent lot. Accordingly, 10% of the GAIC is apportioned to the public purpose land (the PPL proportion). This amount, as indexed under section 201SMA, and any accrued interest on this amount is payable within 3 months after the date of the issue of the statement of compliance. The remaining 90% is apportioned to the balance land (the deferred proportion) and this amount continues to be deferred and subject to indexation and interest under section 201SMA until the amount becomes payable under this Subdivision.
     
    Repeal of Section 201TC(2) which exempts the transfer of land to be held by a public authority or municipal council.
     
    The UDIA has concerns about this amendment, questioning its fairness and the lack of justification for its introduction. Moving forward, the UDIA will be negotiating with Government and the opposition through the parliamentary process to get the best outcome for our members.

    View the State Taxation Acts Further Amendment Bill 2016.