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State Taxation Acts and Other Acts
Amendment Bill 2023
Introduction Print
EXPLANATORY MEMORANDUM
General
This Bill amends the Duties Act 2000 to--
change the frequency of foreign purchaser additional duty
exemption reporting to Parliament from every 6 months to
every 12 months; and
allow the corporate reconstruction and consolidation
concession and exemption to apply to certain sub-sale
arrangements; and
clarify the operation of the pensioner and concession card duty
reduction, the public landholder concession and the corporate
reconstruction and consolidation concession.
The Bill amends the First Home Owner Grant and Home Buyer Schemes
Act 2000 to align with the amendments to the Duties Act 2000 in relation to
the pensioner and concession card duty reduction.
The Bill amends the Local Government Act 1989 to align the meaning of
capital improved value of land under that Act with the meaning of that phrase
under the Valuation of Land Act 1960.
The Bill amends the Property Law Act 1958 in relation to the
apportionment of taxes under a contract of sale of land.
The Bill amends the Sale of Land Act 1962 to--
prohibit the apportionment of land tax between a vendor and
purchaser under a contract of sale of land; and
601061 1 BILL LA INTRODUCTION 3/10/2023
prohibit the apportionment of an existing windfall gains tax
liability between a vendor and purchaser under a contract of
sale of land or option to enter into a contract of sale of land.
The Bill amends the Treasury Corporation of Victoria Act 1992 to correct
a reference to the Transport Integration Act 2010.
The Bill amends the Valuation of Land Act 1960 to provide that the value
of fixtures is included in the capital improved value of land.
The Bill amends the Windfall Gains Tax Act 2021 to--
broaden the windfall gains tax exemption for rezoning errors;
and
clarify the definition of excluded rezoning as it applies to land
in the contribution area within the meaning of section 201RC
of the Planning and Environment Act 1987; and
clarify the operation of the windfall gains tax waiver of for
charitable land.
The Bill amends the Land Tax Act 2005 to--
apply vacant residential land tax to all vacant residential land in
Victoria on and after 1 January 2025; and
extend the definition of vacant residential land tax to include
certain unimproved land in metropolitan Melbourne effective
from 1 January 2026;
alter the imposition of a single COVID-19 debt temporary
surcharge to aggregated land which is otherwise assessed on a
single holding basis; and
change the frequency of absentee owner surcharge exemption
reporting to Parliament from every 6 months to every
12 months; and
adjust the formula for calculating the amount of BTR special
land tax payable by owners of land.
2
Clause Notes
Part 1--Preliminary
Part 1 of the Bill outlines the purposes of the Bill and contains the
commencement provision.
Clause 1 outlines the purposes of the Bill.
Clause 2 provides the commencement dates for the Bill.
Parts 5 and 6 and section 20, which amend the Property Law
Act 1958, Sale of Land Act 1962 and Windfall Gains Tax
Act 2021 in relation to apportionment of taxes under contract of
sale of land, come into operation on 1 January 2024.
Division 3 of Part 10, which amends the Land Tax Act 2005 in
relation to the imposition of a single COVID-19 debt temporary
surcharge to aggregated land which is otherwise assessed on a
single holding basis, comes into operation on 1 January 2024.
Division 1 of Part 10, which amends the Land Tax Act 2005 in
relation to vacant residential land tax and its expansion to
residential land across Victoria, comes into operation on
1 January 2025. This Division commences more than 12 months
after the introduction of this Bill to provide landowners affected
by these changes adequate time to take steps to occupy their
residences, make them habitable or available for occupation, or
complete construction or renovation of their residence.
Division 2 of Part 10, which amends the Land Tax Act 2005 in
relation to vacant residential land tax and its expansion to include
certain unimproved land, comes into operation on 1 January
2026. This Division commences more than 12 months after the
introduction of this Bill in order to provide certainty as to the
status of land for vacant residential land tax purposes and to
provide landowners affected by these changes adequate time to
take steps to prepare their land for development for residential
purposes.
The remaining provisions of the Bill come into operation on the
day after the day on which the Act receives Royal Assent.
3
Part 2--Amendment of Duties Act 2000
Clause 3 amends section 3E(3) of the Duties Act 2000 to substitute
"6 months" with "12 months".
Section 3E(3) requires the Treasurer to cause to be laid before
each House of Parliament, and publish on an appropriate
government website, a report of the exemptions in relation to
foreign purchaser additional duty granted under sections 3E(2)
and 3F of the Duties Act 2000.
The effect of this amendment is to require these reports to be laid
before each House of Parliament every 12 months, rather than
every 6 months.
Clause 4 inserts new section 32G(5), (6) and (7) into the Duties Act 2000,
which enables a corporate reconstruction concession or
exemption under Part 2 of Chapter 11 of the Duties Act 2000 to
apply, in limited circumstances, to a transaction treated as a
sub-sale of land under Division 2 of Part 4A of Chapter 2 of the
Duties Act 2000.
New section 32G(5) provides that a first purchaser is entitled to a
corporate reconstruction concession under Part 2 of Chapter 11 in
respect of the duty charged under section 32C(1)(a) if the sale
contract were a transfer to the first purchaser and that transfer
would be entitled to a concession under Part 2 of Chapter 11.
Notably, this will require that the vendor and first purchaser are
members of the same corporate group, as defined in section
250(1). In such circumstances, the concession will provide that
the duty chargeable on the sale contract is 10% of the duty that
would otherwise be chargeable under section 32C(1)(a).
New section 32G(6) provides that, in limited circumstances, a
subsequent purchaser is entitled to the corporate reconstruction
concession under Part 2 of Chapter 11 in respect of duty charged
under section 32C(1)(b) or (c). Specifically, this concession will
apply if--
the subsequent purchaser would be entitled to the
corporate reconstruction concession if the subsequent
transaction were a transfer of the dutiable property to
the subsequent purchaser. Notably, this will require that
the first purchaser and subsequent purchaser, or two or
more subsequent purchasers, are members of a
corporate group; and
4
the subsequent purchaser obtained the right (the transfer
right) to have the property transferred to it at completion
of the sale contract from another member of the
corporate group who is liable to pay duty under section
32C(1)(a) or (c) (as the case requires).
Example
Company A (the vendor) enters into a sale contract to
transfer land to Company B (the first purchaser).
Pursuant to a nomination clause under the contract,
Company B nominates Company C (the subsequent
purchaser) to have the land transferred to it on completion
of the contract (the subsequent transaction). Company C
gives additional consideration in order to obtain the
transfer right. Company A subsequently transfers the
land to Company C.
Companies B and C are members of a corporate group, as
defined in section 250(1). Company A is not a member of
the group.
Under section 32C(1)(a), duty is charged on the dutiable
value of the sale contract as if it had been completed by
Company B. Company B is liable to pay that amount of
duty. Under section 32C(1)(b), duty is charged on the
dutiable value of the subsequent transaction (the
nomination). Company C is liable to pay that amount of
duty.
Company C is entitled to a concession under section
32G(6) in respect of the duty charged on the subsequent
transaction under section 32C(1)(b) given--
Section 250B(1) provides a concession for an
"eligible transaction", which is defined in section
250A(1) to include a transfer of dutiable property
from one member of a corporate group to another
member of the group. If the subsequent
transaction (i.e. the nomination) were a transfer
to the subsequent purchaser, it would be an
eligible transaction as a transfer of dutiable
property from one member of a corporate group
(Company B) to another member of the group
(Company C).
5
Company C obtained the transfer right from
Company B, who, as the first purchaser, is liable
to pay the amount of duty charged under section
32C(1)(a).
In such circumstances, the duty chargeable on the
subsequent transaction (the nomination) would be 10% of
the duty that would otherwise be chargeable under section
32C(1)(b).
New section 32G(7) provides that a subsequent purchaser is
entitled to a corporate reconstruction exemption under section
250B(2) in respect of duty charged under section 32C(1)(b) or (c)
if the subsequent transaction were a transfer to the subsequent
purchaser and all requirements of section 250B(2) have been
satisfied. One situation where new section 32G(7) is intended to
apply is where a vendor, first purchaser and subsequent purchaser
are members of the same corporate group and all other
requirements in section 250B(2) are satisfied. In such
circumstances, a first purchaser will be entitled to a concession
under new section 32G(5) in respect of duty charged on the sale
contract under section 32C(1)(a) and a subsequent purchaser will
be entitled to an exemption under new section 32G(7) in respect
of duty charged on the subsequent transaction under section
32C(1)(b).
Clause 5 inserts new sections 32N(5), (6) and (7) into the Duties
Act 2000, which enables a corporate reconstruction concession or
exemption under Part 2 of Chapter 11 of the Duties Act 2000 to
apply, in limited circumstances, to a transaction treated as
sub-sale of land under Division 3 of Part 4A of Chapter 2 of the
Duties Act 2000.
New section 32N(5) operates similarly to new section 32G(5),
inserted by clause 4. It provides that a first purchaser is entitled
to a corporate reconstruction concession under Part 2 of
Chapter 11 in respect of the duty charged under section 32J(1)(a)
if the sale contract were a transfer to the first purchaser and that
transfer would be entitled to a concession under Part 2 of
Chapter 11. Notably, this will require that the vendor and first
purchaser are members of the same corporate group, as defined in
section 250(1). In such circumstances, the concession will
provide that the duty chargeable on the sale contract is 10% of
the duty otherwise chargeable under section 32J(1)(a).
6
New section 32N(6) operates similarly to new section 32G(6),
inserted by clause 4. It provides that, in limited circumstances, a
subsequent purchaser is entitled to a corporate reconstruction
concession under Part 2 of Chapter 11 in respect of duty charged
under section 32J(1)(b) or 32J(1)(c). Specifically, this
concession will apply if--
the subsequent purchaser would be entitled to the
corporate reconstruction concession if the subsequent
transaction were a transfer of dutiable property to the
subsequent purchaser. Notably, this will require that the
first purchaser and subsequent purchaser, or two or
more subsequent purchasers, are members of a
corporate group; and
the subsequent purchaser obtained the right (the transfer
right) to have property transferred to it at completion of
the sale contract from another member of the corporate
group who is liable to pay duty under section 32J(1)(a)
or 32J(1)(c) (as the case requires). The concession is
not intended to apply if duty was not charged under
section 32J(1)(a) or 32J(1)(c) (as the case requires).
For example, in circumstances where section 32J(3)(a),
(b), or (c) apply.
Example
Company D (the vendor) enters into a sale contract to
transfer land to Company E (the first purchaser).
Pursuant to a nomination clause under the contract,
Company E nominates Company F (the subsequent
purchaser) to have the land transferred to it on completion
of the contract (the subsequent transaction). After the
subsequent transaction, but before the land is transferred,
land development as defined in section 3(1) occurs in
relation to the land. Company D subsequently transfers
the land to Company F.
Companies E and F are members of a corporate group as
defined in section 250(1). Company D is not a member of
the group.
Company F is not entitled to a concession under new
section 32N(6) as the requirement in new section
32N(6)(b) is not satisfied. This requirement is not
satisfied because although Company F obtained the
transfer right from Company E (who is a member of the
7
same corporate group), Company E was not liable to pay
duty charged under section 32J(1)(a). This is because
section 32J(3)(b) provides that no duty is charged under
section 32J(1)(a) on the dutiable value of the sale contract
as the land development occurred after the subsequent
transaction. This ensures that the appropriate duty is
chargeable when a corporate group acquires land from a
person or entity outside the corporate group.
New section 32N(7) operates similarly to new section 32G(7),
inserted by clause 4. It provides that a subsequent purchaser is
entitled to a corporate reconstruction exemption under section
250B(2) in respect of duty charged under section 32J(1)(b) or (c)
if the subsequent transaction were a transfer to the subsequent
purchaser and all requirements of section 250B(2) have been
satisfied. One situation where new section 32N(7) is intended to
apply is where a vendor, first purchaser and subsequent
purchaser are members of the same corporate group and all other
requirements in section 250B(2) are satisfied. In such
circumstances, a first purchaser will be entitled to a concession
under new section 32N(5) in respect of duty charged on the sale
contract under section 32J(1)(a) and a subsequent purchaser will
be entitled to an exemption under new section 32N(7) in respect
of duty charged on the subsequent transaction under section
32J(1)(b).
Clause 6 inserts new sections 32OE(5), 32OE(6) and 32OE(7) into the
Duties Act 2000, which enables a corporate reconstruction
concession or exemption under Part 2 of Chapter 11 of the Duties
Act 2000 to apply, in limited circumstances, to a transaction
treated as sub-sale of land under Division 3A of Part 4A of
Chapter 2 of the Duties Act 2000.
New section 32OE(5) provides that a first purchaser is entitled to
a corporate reconstruction concession under Part 2 of Chapter 11
in respect of the duty charged under section 32OA(1)(a) if the
option were a transfer to the first purchaser and that transfer
would be entitled to a concession under Part 2 of Chapter 11.
Notably, this will require that the vendor and first purchaser are
members of the same corporate group, as defined in section
250(1). In such circumstances, the concession will provide that
the duty chargeable on the option is 10% of the duty that would
otherwise be chargeable under section 32OA(1)(a).
8
New section 32OE(6) provides that, in limited circumstances, a
subsequent purchaser is entitled to a corporate reconstruction
concession under Part 2 of Chapter 11 in respect of duty charged
under section 32OA(1)(b) or 32OA(1)(c). Specifically, this
concession will apply if--
the subsequent purchaser would be entitled to the
corporate reconstruction concession if the subsequent
transaction were a transfer of dutiable property to the
subsequent purchaser. Notably, this will require that the
first purchaser and subsequent purchaser, or two or
more subsequent purchasers, are members of a
corporate group; and
the subsequent purchaser obtained or assumed the
transfer right in relation to the property from another
member of the corporate group who is liable to pay duty
under section 32OA(1)(a) or 32OA(1)(c) (as the case
requires).
New section 32OE(7) provides that a subsequent purchaser is
entitled to a corporate reconstruction exemption under section
250B(2) in respect of duty charged under section 32OA(1)(b) or
(c) if the subsequent transaction were a transfer to the subsequent
purchaser and all requirements of section 250B(2) have been
satisfied. One situation where new section 32OE(7) is intended
to apply is where a vendor, first purchaser and subsequent
purchaser are members of the same corporate group and all other
requirements in section 250B(2) are satisfied.
Clause 7 inserts new sections 32U(5), 32U(6) and 32U(7) into the Duties
Act 2000, which enables a corporate reconstruction concession or
exemption under Part 2 of Chapter 11 of the Duties Act 2000 to
apply, in limited circumstances, to a transaction treated as sub-
sale of land under Division 4 of Part 4A of Chapter 2 of the
Duties Act 2000.
New section 32U(5) provides that a first purchaser is entitled to a
corporate reconstruction concession under Part 2 of Chapter 11 in
respect of the duty charged under section 32Q(1)(a) if the option
were a transfer to the first purchaser and that transfer would be
entitled to a concession under Part 2 of Chapter 11. Notably, this
will require that the vendor and first purchaser are members of
the same corporate group, as defined in section 250(1). In such
circumstances, the concession will provide that the duty
9
chargeable on the option is 10% of the duty that would otherwise
be chargeable under section 32Q(1)(a).
New section 32U(6) provides that, in limited circumstances, a
subsequent purchaser is entitled to a corporate reconstruction
concession under Part 2 of Chapter 11 in respect of duty charged
under section 32Q(1)(b) or 32Q(1)(c). Specifically, this
concession will apply if:
the subsequent purchaser would be entitled to the
corporate reconstruction concession if the subsequent
transaction were a transfer of dutiable property to the
subsequent purchaser. Notably, this will require that the
first purchaser and subsequent purchaser, or two or
more subsequent purchasers, are members of a
corporate group; and
the subsequent purchaser obtained or assumed the
transfer right in relation to the property from another
member of the corporate group who is liable to pay duty
under section 32Q(1)(a) or 32Q(1)(c) (as the case
requires).
New section 32U(7) provides that a subsequent purchaser is
entitled to a corporate reconstruction exemption under section
250B(2) in respect of duty charged under section 32Q(1)(b) or (c)
if the subsequent transaction were a transfer to the subsequent
purchaser and all requirements of section 250B(2) have been
satisfied. One situation where section 32U(7) is intended to
apply is where a vendor, first purchaser and subsequent purchaser
are members of the same corporate group and all other
requirements in section 250B(2) are satisfied.
Clause 8 amends section 58 of the Duties Act 2000, which sets out who is
an eligible cardholder.
Subclause (1) inserts a new heading to section 58. The heading
is: "Who is an eligible cardholder?". This amendment ensures
that the heading forms part of the Duties Act 2000 in accordance
with section 36 of the Interpretation of Legislation Act 1984.
Subclause (2) substitutes section 58(1). New section 58(1) does
not include the requirements that an eligible cardholder must be a
bona fide purchaser of an estate in fee simple in land for adequate
consideration and must not have received an exemption, refund
or rebate of duty in respect of a transfer under any predecessor of
10
section 60. These requirements are now set out in section 60AA,
as amended by clause 9, and must now be satisfied by each
transferee for a transfer to be eligible for an exemption or
concession under section 60.
Clause 9 inserts new paragraphs (ab), (ac) and (ad) into section 60AA of
the Duties Act 2000, which provide additional requirements that
each transferee in respect of a transfer must satisfy for an
exemption or concession under section 60 to be applied to the
transfer. These requirements currently only apply to an eligible
cardholder. The requirements will now apply to all transferees in
respect of a transfer to reflect that all those transferees benefit
from an exemption or concession under section 60. This ensures
the integrity of the exemption and concession in section 60.
New paragraph (ab) of section 60AA requires that each transferee
in respect of a transfer is a natural person acting only in their
personal capacity. New paragraphs (ac) and (ad) require that
each transferee is a bona fide purchaser of an estate in fee simple
in land for adequate consideration and that each transferee has
not received an exemption, refund or rebate of duty in respect of
a transfer under any predecessor of section 60. These changes
are tied to the change being made by clause 8, which removes the
requirements currently set out in section 58(1)(b) and (d) of the
Duties Act 2000.
Clause 10 amends section 60A of the Duties Act 2000.
Subclause (1) amends the heading to section 60A to omit the
words "eligible cardholder". This amendment reflects that an
election for the purpose of the section is now required to be made
by all transferees in respect of a transfer, not just an eligible
cardholder.
Subclauses (2), (3) and (4) amend subsections (1), (2) and (3).
These amendments reflect that it is a transferee in respect of a
transfer, not just an eligible cardholder, who is entitled to an
exemption or concession under section 60 and, where applicable,
must make an election under section 60A.
Subclause (5) repeals section 60A(4). Section 60A(4) is
redundant as it refers to a duty exemption for mortgage duty,
which was abolished from 1 July 2004.
11
Clause 11 inserts new section 87(3B) into the Duties Act 2000, which
provides that the concessional rate of duty in section 87(1) does
not apply to a relevant acquisition in a public landholder that is
also eligible for a concessional rate of duty under Part 2 of
Chapter 11 of the Duties Act 2000.
Section 87(1) provides that the duty chargeable on a relevant
acquisition in a public landholder is 10% of the duty that would
be chargeable under the Duties Act 2000 on a transfer of all the
land holdings of the landholder in Victoria. If the relevant
acquisition is also an eligible transaction to which section 250B
applies or a relevant acquisition to which section 250DI applies,
the duty chargeable on the eligible transaction or relevant
acquisition is also 10% of the duty that would otherwise be
chargeable. In certain circumstances, both concessional rates of
duty may apply to a relevant acquisition in a public landholder,
resulting in an effective concessional rate of 1% of the duty
otherwise chargeable.
New section 87(3B) corrects this anomaly to provide that both
concessional rates of duty cannot apply to a relevant acquisition
in a public landholder. If both concessional rates of duty would
otherwise apply, only the concessional rate of duty under Part 2
of Chapter 11 (being the concession rate of 10% of the duty that
would otherwise be chargeable) applies.
Clause 12 amends section 250B(2)(c) and (3A)(c) of the Duties Act 2000,
in relation to the exemption from duty for subsequent eligible
transactions that form part of the same arrangement, to provide
that the 30 day period for an arrangement commences on the day
of the first eligible transaction. The effect of this amendment is
to make the duty exemption available even if a second or
subsequent eligible transaction occurs on the same day as the first
eligible transaction in that arrangement.
Part 3--Amendment of First Home Owner Grant and Home
Buyer Schemes Act 2000
Clause 13 makes consequential amendments to section 18(5) of the First
Home Owner Grant and Home Buyer Schemes Act 2000 to
reflect the amendments made by this Bill and by Division 3 of
Part 2 of the State Taxation Acts Amendment Act 2023.
12
Part 4--Amendment of Local Government Act 1989
Part 4 amends the definition of capital improved value in the Local
Government Act 1989 to ensure there is consistency with the definition of
capital improved value in the Valuation of Land Act 1960.
Clause 14 substitutes the definition of capital improved value in
section 3(1) of the Local Government Act 1989 to stipulate that
capital improved value has the same meaning as in section 2(1)
of the Valuation of Land Act 1960.
Part 5--Amendment of Property Law Act 1958
Part 5 of the Bill makes a consequential amendment to the Property Law
Act 1958 as a result of the amendment in Part 6 of the Bill relating to the
prohibition on apportionment of land tax and windfall gains tax under certain
private arrangements.
Clause 15 amends clause 9 of Schedule 3 to the Property Law Act 1958.
Schedule 3 to the Property Law Act 1958 provides for general
conditions of sale that may be adopted into a contract of sale for
land not under the operation of the Transfer of Land Act 1958.
Existing clause 9 specifies the condition that taxes in respect of
the relevant land are generally paid by the vendor until the date
the purchaser becomes entitled to possession, at which point they
are apportioned between the vendor and purchaser as necessary.
In addition, land tax must be apportioned on the basis that the
land being sold is the only land of which the vendor is the owner
within the meaning of the Land Tax Act 2005 (otherwise known
as apportioning land tax on a single holding basis).
New clause 9 excludes tax payable under the Land Tax
Act 2005 from being subject to apportionment between the
vendor and purchaser. This ensures that in relation to land tax,
the vendor remains responsible for any tax liability arising under
the Land Tax Act 2005 for the vendor's period of ownership up
until the land is sold, and that the vendor cannot require the
purchaser to pay any amount for or towards that liability.
In relation to windfall gains tax, clause 9 excludes assessed
windfall gains tax liabilities from being subject to apportionment
between the vendor and purchaser. This ensures that the vendor
remains responsible for any tax liability arising under the
Windfall Gains Tax Act 2021 and specified in a notice of
13
assessment served on a person on or before the date the relevant
contract is entered into and that the vendor cannot require the
purchaser to pay any amount for or towards that liability.
This amendment does not affect the apportionment of other rates,
taxes, assessments, fire insurance premiums and other outgoings,
including the apportionment of windfall gains tax in situations
where a notice of assessment of the tax has not been served on a
person at the time the contract is entered into.
Part 6--Amendment of Sale of Land Act 1962
Part 6 of the Bill amends the Sale of Land Act 1962 to prohibit the
apportionment of land tax and other taxes under the Land Tax Act 2005
between a vendor and purchaser under a contract of sale of land, and to
prohibit windfall gains tax under the Windfall Gains Tax 2021 from being
apportioned between a vendor and purchaser under a contract of sale of land
if, at the time the contract of sale is entered into, a notice of assessment has
been served in respect of the windfall gains tax liability. This also applies to
an option to enter into a contract of sale of land.
Clause 16 inserts new sections 10G and 10H into the Sale of Land
Act 1962.
New section 10G prohibits the recovery of land tax from a
purchaser under a contract of sale of land.
Subsection (1) provides that a provision of a contract of sale of
land is of no effect to the extent that the provision purports to
require the purchaser under the contract to pay an amount for or
towards tax for which the vendor is or may become liable in
respect of the land under the Land Tax Act 2005.
Subsection (2) provides that a vendor commits an offence if the
vendor enters into a contract of sale of land that purports to
require the purchaser to pay an amount for or towards tax for
which the vendor is or may become liable in respect of the land
under the Land Tax Act 2005. The maximum penalty for this
offence is 60 penalty units for a natural person or 300 penalty
units for a body corporate.
New section 10H prohibits the recovery of windfall gains tax
from a purchaser under a contract of sale of land or an option to
enter into a contract of sale of land, in certain circumstances.
14
Subsection (1) provides that a provision of an option to enter into
a contract of sale of land is of no effect to the extent that the
provision purports to require the purchaser under the contract to
pay an amount for or towards an existing windfall tax liability in
respect of the land.
Subsection (2) provides that a person commits an offence if the
person grants an option to enter into a contract of sale in respect
of the land, there is an existing windfall gains tax liability in
respect of the land and the option purports to require the
purchaser to pay an amount for or towards the tax payable under
the windfall gains tax liability. The maximum penalty for this
offence is 60 penalty units for a natural person or 300 penalty
units for a body corporate.
Subsection (3) provides that a provision of a contract of sale of
land is of no effect to the extent that the provision purports to
require the purchaser under the contract to pay an amount for or
towards an existing windfall tax liability in respect of the land.
Subsection (4) provides that a vendor commits an offence if the
vendor enters into a contract of sale of land, there is an existing
windfall gains tax liability in respect of the land, and the contract
purports to require the purchaser to pay an amount for or towards
the tax payable under the windfall gains tax liability. The
maximum penalty for this offence is 60 penalty units for a natural
person or 300 penalty units for a body corporate.
Subsection (5) provides that windfall gains tax liability means a
liability for an amount of tax arising under the Windfall Gains
Tax Act 2021 and specified in a notice of assessment served on
any person under section 14 of the Taxation Administration
Act 1997.
Part 7--Amendment of Treasury Corporation of Victoria
Act 1992
Clause 17 amends Schedule 1 to the Treasury Corporation of Victoria
Act 1992 to substitute "Transport Integration 2010" with
"Transport Integration Act 2010", correcting the missing word
"Act" in the reference to the Transport Integration Act 2010.
15
Part 8--Amendment of Valuation of Land Act 1960
Part 8 amends the Valuation of Land Act 1960 to clarify how capital
improved value is to be calculated.
Clause 18 subclause (1) inserts a new definition for fixture in section 2(1)
of the Valuation of Land Act 1960. The definition clarifies that
fixture, on land, means any of the following, whether owned by
the owner of the land or a tenant or any other occupier of the
land--
anything that constitutes a fixture at law;
any other item fixed to the land.
Subclause (2) inserts new section 2(2B) into the Valuation of
Land Act 1960 to clarify that in determining the capital
improved value of any land, the sum which the land might be
expected to realize at the time of valuation includes the value of
the fixtures (as newly defined in section 2(1)) on the land.
Part 9--Amendment of Windfall Gains Tax Act 2021
Clause 19 amends the definition of charitable land and excluded rezoning
in section 3(1) of the Windfall Gains Tax Act 2021.
Paragraph (a) inserts the words "or part of land" into the
definition of charitable land. This amendment is tied to the
change being made to the charitable land waiver in section 41(1)
of the Windfall Gains Tax Act 2021 by clause 23 of the Bill.
The amendments provide that where only part of land is being
used as charitable land at the time of a WGT event then the
charitable land waiver in section 41(1) can apply to that land.
That is, it is not necessary for the whole of the land to be
charitable land at the time of the WGT event.
Paragraph (b) substitutes paragraph (c) of the definition of
excluded rezoning, which refers to the first rezoning after 1 July
2023 of land that was in the contribution area for the purposes of
the growth areas infrastructure contribution immediately before
that date. New paragraph (c) removes the phrase "after 1 July
2023" from the definition, as the reference to this date (the
commencement day of the windfall gains tax provisions) creates
ambiguity when land was not in the contribution area before or
on 1 July 2023, but becomes part of the contribution area after
1 July 2023, and is then subsequently rezoned. Such a rezoning
16
is intended to be an excluded rezoning for windfall gains tax
purposes.
Clause 20 inserts a note at the foot of section 8 of the Windfall Gains Tax
Act 2021 referring to the prohibition concerning contracts that
require a purchaser to pay windfall gains tax of a vendor that is
being inserted into the Sale of Land Act 1962 by clause 16 of the
Bill.
Clause 21 amends section 38 of the Windfall Gains Tax Act 2021 which
contains the exemption in relation to rezoning errors.
Subclause (1) amends section 38(1) to allow the exemption to
apply if the Commissioner is satisfied that the rezoning is
correcting an obvious or technical error in the Victorian Planning
Provisions or a planning scheme, whether or not the rezoning is
prepared under section 20A of the Planning and Environment
Act 1987.
Subclause (2) inserts new subsection (1A) into section 38 which
provides that the Commissioner may consult the Secretary to the
Department of Transport and Planning in determining whether a
rezoning is a correcting WGT event.
Subclause (3) inserts new subsection (3A) into section 38.
The new subsection addresses how to determine the value uplift
when a rezoning consists partly of a correcting rezoning and
partly of a rezoning that is not a correcting rezoning, including
requiring the Commissioner to seek advice from the
Valuer-General to determine the value uplift attributable to the
correcting rezoning that is to be ignored.
Clause 22 amends the definition of Amendment Tracking System in section
40(3) of the Windfall Gains Tax Act 2021 to reflect the current
name of the Department of Transport and Planning that manages
the Amendment Tracking System.
Clause 23 amends section 41(1) by inserting the words "or relevant part of
the land" after the word "land". This amendment is tied to the
change being made to the definition of charitable land in section
3(1) of the Windfall Gains Tax Act 2021 by clause 19 of the
Bill. The amendments provide that where only part of land is
being used as charitable land at the time of a WGT event then the
charitable land waiver in section 41(1) can apply to that land.
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That is, it is not necessary for the whole of the land to be
charitable land at the time of the WGT event.
Clause 24 amends section 43 of the Windfall Gains Tax Act 2021 to
reflect the current name of the Department of Transport and
Planning.
Part 10--Amendment of Land Tax Act 2005
Division 1--Vacant residential land tax
Division 1 of Part 10 of the Bill amends the Land Tax Act 2005 by
removing the existing geographic boundary within which vacant residential
land tax applies. The purpose of these amendments is to extend the
application of vacant residential land tax to all vacant residential land in
Victoria.
Clause 25 amends the definition of VRT land in section 3(1) of the Land
Tax Act 2005 by removing the requirement for land to be within
the specified geographic area as a consequence of the repeal of
section 34D by clause 27 of this Bill. This amendment also
ensures that other provisions in the Land Tax Act 2005 which
refer to VRT land do not include a requirement for VRT land to
be located within any specified geographic boundary.
Clause 26 amends section 34A(1) of the Land Tax Act 2005 by removing
the requirement for land to be within the specified geographic
area as a consequence of the repeal of section 34D by clause 27
of this Bill. The effect of this amendment is to reflect the intent
for vacant residential land tax to be imposed each year on taxable
land in Victoria that is residential land which is vacant.
Clause 27 repeals section 34D of the Land Tax Act 2005 which defines the
specified geographic area. Section 34D is being repealed to
remove any geographic boundary which limits the imposition of
vacant residential land tax in Victoria. This amendment reflects
the intention to extend vacant residential land tax to all vacant
residential land in Victoria.
Clause 28 amends section 88B(1)(b) of the Land Tax Act 2005 to replace
the requirement for an owner's or vested beneficiary's place of
business or employment to be in the specified geographic area
within the meaning of section 34D with the requirement that it be
in Victoria, as a consequence of the repeal of section 34D by
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clause 27 of this Bill and the extension of vacant residential land
tax to all vacant residential land in Victoria.
Clause 29 repeals Schedule 2A to the Land Tax Act 2005 as a consequence
of the repeal of section 34D by clause 27 of this Bill.
Clause 30 inserts new clause 21 into Schedule 3 to the Land Tax Act 2005.
Subclause (1) provides for transitional arrangements specifying
the date on which construction or renovation of a residence on
land is taken to have commenced in circumstances where the
land was outside the specified geographic area before the repeal
of section 34D, and the land is residential land as defined in
section 34B(2) as at 1 January 2025.
Subclause (2) provides for transitional arrangements specifying
the date on which a residence on land is taken to become
uninhabitable in circumstances where the land was outside the
specified geographic area before the repeal of section 34D, and
the land is residential land as defined in section 34B(2A) as at
1 January 2025.
Subclause (3) defines amending Act to mean the State Taxation
Acts and Other Acts Amendment Act 2023 and
commencement day to mean the date of commencement of
Division 1 of Part 10 of the amending Act, for the purposes of
this clause.
Division 2--Vacant residential land tax--unimproved land
Division 2 of Part 10 of the Bill amends the Land Tax Act 2005 to impose
vacant residential land tax on land that has been unimproved for 5 years or
more in established areas of metropolitan Melbourne. This Division sets out
when land constitutes residential land by reference to various conditions or
requirements and when such lands will be regarded as vacant residential land.
This Division also introduces two new exemptions from vacant residential
land tax for land contiguous to principal place of residence land and for land
that cannot be used or developed for residential purposes.
Clause 31 inserts new definitions of AVPCC, non-residential use, non-
residential zone, planning scheme and zone into section 3(1) of
the Land Tax Act 2005, which are relevant to the amendments
made by this Division of the Bill.
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Clause 32 amends section 34B of the Land Tax Act 2005 by repealing
subsection (2)(b) and inserting new subsections (2B) and (4).
Subsection (2)(b) is repealed to remove the condition that to be
residential land under section 34B(2), land with a residence under
construction or renovation needed to have a prior residence.
The effect of this amendment is to ensure that that land will be
considered residential land under subsection (2) where the
construction of a residence commences on land that was
previously unimproved, and that land is not otherwise considered
residential land under another category in section 34B.
This amendment is necessary to achieve the policy intent of the
amendments under this Division.
New subsection (2B) provides for a new category of residential
land and sets out the conditions which must be met for land to be
considered residential land. New paragraphs (a) to (d) contain
the conditions for this category. These conditions reflect the
policy that only residential land within specific municipal
districts in Councils of metropolitan Melbourne, to which another
category of residential land within the meaning of section
34B(2B) does not apply, will be regarded as residential land.
This newly defined residential land will be liable for vacant
residential land tax if the land is vacant under section 34C as
amended by clause 34.
New section 34B(4) provides the Commissioner with the
discretion to determine that land is not residential land within the
meaning of new subsection (2B) if the land is to be solely or
primarily used developed for a non-residential use and there is an
acceptable reason for that use or development not having
commenced.
Clause 33 inserts new section 34BA into the Land Tax Act 2005 to enable
the Commissioner to determine when land is considered to be
under development for a non-residential use for the purposes of
new section 34B(2B) as amended by clause 32.
New subsection (1) sets out the activities that will indicate that
land is under development for a non-residential use for the
purposes of new section 34B(2B)(c).
New subsection (2) inserts a discretion under paragraph (a) to
enable the Commissioner to determine that land is under
development for a non-residential use if the Commissioner is
satisfied that other steps are being taken which demonstrate the
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land is genuinely being developed for non-residential use. This
subsection also introduces another discretion under paragraph (b)
as an integrity measure to ensure that activities described in new
subsection (1) that are undertaken to avoid vacant residential land
tax can be disregarded so that the land to which those activities
relate is not treated as land under development for a non-
residential use.
New subsection (3) provides for how the Commissioner will
determine the date on which the development of land for non-
residential use commenced where an application or request
described in subsection (1) is made and the discretion under
subsection (2)(a) is exercised.
Clause 34 amends section 34C of the Land Tax Act 2005 by inserting new
subsections (2B), (4B) and (4C) to determine when residential
land under section 34B(2B) becomes vacant residential land.
New subsection (2B) provides that residential land under new
section 34B(2B) inserted by clause 32 will only be considered
vacant after 5 years or more. The effect of this subsection is to
allow lands which meet the conditions under new section
34B(2B) to be excluded from the vacant residential land tax for
up to 5 years before it is regarded as vacant and liable for the tax.
The 5-year period is considered to provide adequate time for an
owner of residential land to commence construction of a
residence before it is regarded as vacant residential land.
New subsection (4B) inserts a discretion to enable the
Commissioner to determine that residential land is not vacant in a
tax year if satisfied that there is a genuine intention for a
residence to be constructed on that land and there are acceptable
reasons for the construction not commencing within the 5-year
period described in new section 34C(2B).
New subsection (4C) provides transferees of residential land
under new section 34B(2B) with the full 5 year period described
in new subsection (2B) in which to commence construction on
the land before it is considered vacant and liable for vacant
residential land tax. This ensures that transferees who acquire
residential land with the intention of developing it for residential
purposes are not disadvantaged by the previous owner's period of
ownership. This subsection also contains an integrity measure
which allows the Commissioner to disregard the change in
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ownership of land as being a break in the 5-year period in tax
avoidance circumstances.
Clause 35 inserts new sections 88F and 88G into the Land Tax Act 2005.
New section 88F provides a new exemption from vacant
residential land tax for land which is contiguous to land used and
occupied as a person's principal place of residence. This section
contains conditions which must be satisfied in order for the
exemption to apply. This exemption reflects the policy that
residential land under new section 34B(2B) inserted by clause 32
and contiguous to a person's principal place of residence land,
such as land used for a tennis court or swimming pool, is exempt
from vacant residential land tax.
New section 88G provides a new exemption from vacant
residential land tax for land which cannot be used or developed
for residential purposes. This exemption ensures that land does
not become liable for vacant residential land tax if it is incapable
of being used or developed for residential purposes, or is
practically impossible to use or develop for residential purposes.
This exemption is not intended to apply in cases where
development of the land is merely uneconomical or inconvenient.
Clause 36 inserts new Schedules 2B and 2C into the Land Tax Act 2005.
New Schedule 2B provides a list of Councils in metropolitan
Melbourne, in the municipal district of which land must be
located for section 34B(2B)(a) to be satisfied.
New schedule 2C is relevant to the new definition of non-
residential zone inserted into section 3(1) by clause 31 of this
Bill, which is used to determine whether land is located within a
zone other than a non-residential zone for new section
34B(2B)(b) to be satisfied.
Division 3--Single COVID-19 debt temporary land tax surcharge
where land assessed on a single holding basis
Generally, land tax is assessed on an aggregated basis based on the total
taxable value of an owner's taxable landholdings. However, in certain
circumstances land is assessed separately, on a "single holding basis." This is
intended to be a concessionary treatment. Land is assessed on a single
holding basis rather than an aggregate basis when the land is taxable
charitable, municipal or public land, or when the land is owned by a trustee
of a discretionary trust or a unit trust scheme and is used and occupied as the
22
principal place of residence of a nominated PPR beneficiary of that
discretionary trust or a unit trust scheme.
The State Taxation Acts Amendment Act 2023 introduced a COVID-19
debt temporary land tax surcharge for a period of 10 years, which includes a
fixed amount of $500 for taxable landholdings between $50 000 and
$100 000, a fixed amount of $975 for taxable landholdings above $100 000,
and a variable amount of 0ꞏ10 percentages points for taxable landholdings
above $300 000 for general land tax rates and $250 000 for trust surcharge
rates.
An unintended consequence of the introduction of the COVID-19 debt
temporary land tax surcharge is that the fixed amount of the surcharge
(either $500 or $975) applies to each land which is assessed on a single
holding basis, which can reduce or in some cases eliminate the concessionary
treatment which is intended to apply to such land.
Division 3 of Part 10 of the Bill amends the Land Tax Act 2005 to ensure
that an owner of land assessed on a single holding basis continues to receive
an appropriate concession during the years that the COVID-19 debt
temporary land tax surcharge applies. This is achieved in situations where
land is to be assessed on a single holding basis by calculating land tax in
accordance with the relevant rate but excluding the COVID-19 debt
temporary land tax surcharge (clauses 42 to 45), and then adding an
additional amount which is equal to the COVID-19 debt temporary land tax
surcharge calculated on the owner's taxable landholdings on an aggregate
basis (clauses 37 to 41). The calculation of the amount equal to the
COVID-19 debt temporary land tax surcharge is to be determined in
accordance with a new Part being inserted into Schedule 1 to the Land Tax
Act 2005 (clause 46).
Clause 37 amends section 37 of the Land Tax Act 2005.
Subclause (1) clarifies that when land tax is assessed on taxable
charitable, municipal or public land on a single holding basis
under subsection (2), the rates of land tax which apply are the
rates in Parts 1, 3, 4 or 5 of Schedule 1, not in new Part 6 of
Schedule 1 to the Land Tax Act 2005 being inserted by
clause 46 of this Bill.
Clause 37(2) inserts new section 37(3A) into the Land Tax
Act 2005, which has the effect of incorporating into the owner's
land tax liability an amount equal to the COVID-19 debt
temporary land tax surcharge calculated on the owner's taxable
23
landholdings on an aggregate basis as determined in accordance
with new Part 6 of Schedule 1 inserted by clause 46.
Clause 38 inserts new section 46A(7) into the Land Tax Act 2005, which
has the effect of incorporating into the tax payable by--
a trustee of a unit trust scheme which is not an absentee
trust and which has a nominated PPR beneficiary in
force (under section 46H), or
a trustee of a discretionary trust which is not an absentee
trust and which has a nominated PPR beneficiary in
force (under section 46H) but no nominated beneficiary
in force (under section 46F),
an amount equal to the COVID-19 debt temporary land tax
surcharge calculated on the trustee's taxable landholdings on an
aggregate basis as determined in accordance with new Part 6 of
Schedule 1 to the Land Tax Act 2005 being inserted by
clause 46 of this Bill.
Clause 39 inserts new section 46G(5A) into the Land Tax Act 2005, which
has the effect of incorporating into the tax payable by a trustee of
a discretionary trust which is not an absentee trust and which has
both a nominated PPR beneficiary in force (under section 46H)
and a nominated beneficiary in force (under section 46F) an
amount equal to the COVID-19 debt temporary land tax
surcharge calculated on the trustee's taxable landholdings on an
aggregate basis as determined in accordance with new Part 6 of
Schedule 1 to the Land Tax Act 2005 being inserted by
clause 46 of this Bill.
Clause 40 inserts new section 46IA(2A) into the Land Tax Act 2005,
which has the effect of incorporating into the tax payable by--
a trustee of a unit trust scheme which is an absentee
trust and which has a nominated PPR beneficiary in
force (under section 46H), or
a trustee of a discretionary trust which is an absentee
trust and which has a nominated PPR beneficiary in
force (under section 46H) but no nominated beneficiary
in force (under section 46F),
24
an amount equal to the COVID-19 debt temporary land tax
surcharge calculated on the trustee's taxable landholdings on an
aggregate basis as determined in accordance with new Part 6 of
Schedule 1 to the Land Tax Act 2005 being inserted by
clause 46 of this Bill.
Clause 41 inserts new section 46IE(7) into the Land Tax Act 2005, which
has the effect of incorporating into the tax payable by a trustee of
a discretionary trust which is an absentee trust and which has
both a nominated PPR beneficiary in force (under section 46H)
and a nominated beneficiary in force (under section 46F) an
amount equal to the COVID-19 debt temporary land tax
surcharge calculated on the trustee's taxable landholdings on an
aggregate basis as determined in accordance with new Part 6 of
Schedule 1 to the Land Tax Act 2005 being inserted by
clause 46 of this Bill.
Clause 42 inserts new clause 1.7 into Schedule 1 to the Land Tax
Act 2005, which has the effect of assessing the general
(non-trust, non-absentee) rate of land tax excluding the
COVID-19 debt temporary land tax surcharge in certain
circumstances. These circumstances are--
calculating land tax on taxable charitable, municipal and
public land where the general (non-trust, non-absentee)
rate of land tax would otherwise apply;
calculating land tax for a discretionary trust which is not
an absentee trust and which only holds pre-2006 land
and has both a nominated PPR beneficiary in force
(under section 46H) and a nominated beneficiary in
force (under section 46F);
calculating land tax on taxable pre-2006 land for a
discretionary trust which is not an absentee trust and
which holds both pre-2006 land and post-2006 land and
which has both a nominated PPR beneficiary in force
(under section 46H) and a nominated beneficiary in
force (under section 46F);
calculating land tax on land used as the principal place
of residence of a nominated PPR beneficiary of a unit
trust scheme or discretionary trust which is not an
absentee trust; and
25
calculating land tax on land used as the principal place
of residence of a nominated PPR beneficiary of a unit
trust scheme which is an absentee trust and is in a chain
of trusts.
Clause 43 inserts new clause 3.7 into Schedule 1 to the Land Tax
Act 2005, which has the effect of assessing the non-absentee trust
rate of land tax excluding the COVID-19 debt temporary land tax
surcharge in certain circumstances. These circumstances are--
calculating land tax on taxable charitable, municipal and
public land where the non-absentee trust rate of land tax
would otherwise apply;
calculating land tax for a discretionary trust which is not
an absentee trust and which has a nominated PPR
beneficiary in force (under section 46H) not no
nominated beneficiary in force (under section 46F);
calculating land tax for a discretionary trust which is not
an absentee trust and which only holds post-2006 land
and has both a nominated PPR beneficiary in force
(under section 46H) and a nominated beneficiary in
force (under section 46F);
calculating land tax on taxable post-2006 land for a
discretionary trust which is not an absentee trust and
which holds both pre-2006 land and post-2006 land and
which has both a nominated PPR beneficiary in force
(under section 46H) and a nominated beneficiary in
force (under section 46F);
calculating land tax on land held by a unit trust which is
an absentee trust and is in a chain of trusts and has a
nominated PPR beneficiary in force (under section 46H)
which is not used as the principal place of residence of
the nominated PPR beneficiary.
Clause 44 inserts new clause 4.7 into Schedule 1 to the Land Tax
Act 2005, which has the effect of assessing the general absentee
rate of land tax excluding the COVID-19 debt temporary land tax
surcharge in certain circumstances. These circumstances are--
calculating land tax on taxable charitable, municipal and
public land where the general absentee rate of land tax
would otherwise apply;
26
calculating land tax on land used as the principal place
of residence of a nominated PPR beneficiary of a unit
trust scheme which is an absentee trust and is not in a
chain of trusts;
calculating land tax for a discretionary trust which is an
absentee trust and which only holds pre-2006 land and
has both a nominated PPR beneficiary in force (under
section 46H) and a nominated beneficiary in force
(under section 46F);
calculating land tax on taxable pre-2006 land for a
discretionary trust which is an absentee trust and which
holds both pre-2006 land and post-2006 land and which
has both a nominated PPR beneficiary in force (under
section 46H) and a nominated beneficiary in force
(under section 46F).
Clause 45 inserts new clause 5.7 into Schedule 1 to the Land Tax
Act 2005, which has the effect of assessing the absentee trust rate
of land tax excluding the COVID-19 debt temporary land tax
surcharge in certain circumstances. These circumstances are--
calculating land tax on taxable charitable, municipal and
public land where the absentee trust rate of land tax
would otherwise apply;
calculating land tax for a discretionary trust which is an
absentee trust and which only holds post-2006 land and
has both a nominated PPR beneficiary in force (under
section 46H) and a nominated beneficiary in force
(under section 46F);
calculating land tax on taxable post-2006 land for a
discretionary trust which is an absentee trust and which
holds both pre-2006 land and post-2006 land and which
has both a nominated PPR beneficiary in force (under
section 46H) and a nominated beneficiary in force
(under section 46F); and
calculating land tax on land held by a unit trust which is
an absentee trust and is not in a chain of trusts and has a
nominated PPR beneficiary in force (under section 46H)
which is not used as the principal place of residence of
the nominated PPR beneficiary.
27
Clause 46 inserts new Part 6 into Schedule 1 to the Land Tax Act 2005,
which contains the rates and method used to determine the
amount which is equal to the COVID-19 debt temporary land
tax surcharge calculated on the owner's taxable landholdings on
an aggregate basis.
Division 4--Miscellaneous
Clause 47 amends section 3BB(1) of the Land Tax Act 2005 to substitute
"6 months" with "12 months".
Section 3BB(1) requires the Treasurer to cause to be laid before
each House of Parliament, and publish on an appropriate
government website, a report of the exemptions in relation to the
absentee owner surcharge granted under sections 3B, 3BA and
3C of the Land Tax Act 2005.
The effect of this amendment is to require these reports to be laid
before each House of Parliament every 12 months, rather than
every 6 months, to align the period of reporting to the annual
nature of land tax.
Clause 48 amends section 50B(2) of the Land Tax Act 2005, by changing
the meaning of the variable BR in the formula for BTR special
land tax set out in the subsection, to reflect the new rates of land
tax that were introduced by the State Taxation Acts
Amendment Act 2023.
Part 11--Repeal of this Act
Clause 49 provides for the automatic repeal of the Act on 1 January 2027.
The repeal of the Act does not affect the continuing operation of
the amendments made by it (see section 15(1) of the
Interpretation of Legislation Act 1984).
28