Windfall Gains Tax – Land Rezoning in Victoria

The Windfall Gains Tax (WGT) applies to significant increases in land value resulting from rezoning.  

WGT only applies in Victoria and is effective from effective from 1 July 2023. 

 

How Does It Work? 

• When land is rezoned (e.g., from farmland to residential or commercial use), its value may increase substantially. 

• WGT is applied to the uplift in land value due to rezoning. 

• The landowner is responsible for paying the tax at the time of rezoning, though deferral options are available. 

 

How is the rezoning calculated  

• The Valuer-General Victoria (VGV) conducts: 

• A pre-rezoning valuation (hypothetical value before the rezoning). 

• A post-rezoning valuation (value immediately after the rezoning). 

• The uplift amount is calculated as: Post-rezoning value – Pre-rezoning value = Uplift 

These valuations are usually as at the date of the rezoning, and the land is assumed to be in the same physical state — only the planning control (zoning) changes. The valuation is independent of the land tax notice valuation.  

Example: 

Land rezoned on 1 March 2025 from Farming Zone to Residential Growth Zone. 

• Pre-rezoning value (as determined by VGV): $1.2 million 

• Post-rezoning value (as determined by VGV): $3.0 million
  Uplift = $1.8 million → WGT applies 

 

Tax Rates 

• Uplift below $100,000 → No tax. 

• Uplift between $100,000 and $500,000 → Taxed at 62.5% on the amount exceeding $100,000. 

• Uplift above $500,000 → Taxed at 50% of the total uplift. 

 

 

 

Exemptions and Exclusions: 

• Residential land of 2 hectares or less is exempt if it’s the principal place of residence (PPR). 

• Charity landowners may qualify for full or partial exemption. 

• Some government-led rezonings may be excluded (e.g., GAIC areas). 

 

Payment Deferrals 

The WGT doesn’t have to be paid immediately when the rezoning happens, you can defer payment until a ‘trigger event’ occurs. 

• You need to apply to the State Revenue Office (SRO) Victoria to register the deferral. 

• The deferred tax amount becomes a charge on the land title — like a mortgage or caveat — which ensures the tax is paid when the trigger event happens. 

• Interest is payable on the deferred amounts.  

 

Common Trigger Events for WGT Payment: 

• Sale or transfer of the land (or part of it) to someone else. 

• Subdivision of the land (e.g., creating new lots). 

• Development approval that allows for subdivision or significant change in land use. 

• The land ceasing to be owned by the person/entity that had the rezoning uplift (e.g., transfer to a related party that does not qualify for deferral). 

 

Objection Rights 

Landowners can object to: 

• The pre-rezoning land value (CIV1). 

• The post-rezoning land value (CIV2). 

Objections must be lodged in writing with the Commissioner of State Revenue within two months of receiving the WGT assessment. 

 

Examples of how WGT applies; 

 

Example 1 – Farmland Rezoned for Residential Use 

• A landowner owns farmland valued at $2 million (CIV before rezoning). 

• The land is rezoned for residential development. 

• Its new value becomes $5 million (CIV after rezoning). 

• The uplift in value is $3 million ($5M – $2M). 

• Since the uplift exceeds $500,000, 50% of $3M ($1.5M) is payable as WGT. 

 

Example 2 – Contract Before Rezoning, Settlement After 

• A sale contract was signed before rezoning, but settlement has not occurred. 

• The seller remains the landowner at the time of rezoning. 

• The seller is responsible for paying WGT. 

 

Example 3: Moderate uplift – partial WGT 

Scenario:
Land rezoned from industrial to mixed-use (residential and commercial). 

• Pre-rezoning value: $600,000 

• Post-rezoning value: $1,100,000 

• Uplift: $500,000 

Tax calculation: 

• $100,000 is exempt. 

• Taxable uplift = $400,000 

• Because uplift is between $100,001 and $500,000, tax rate is 62.5% of the uplift above $100,000: 

 WGT = 62.5% × $400,000 = $250,000 

 

Example 4: Large uplift – maximum rate 

Scenario:
Large parcel of farmland rezoned to allow for high-density residential development. 

• Pre-rezoning value: $1.5 million 

• Post-rezoning value: $4.5 million 

• Uplift: $3.0 million 

Tax calculation: 

• $100,000 exempt 

• Taxable uplift = $2.9 million 

• As the uplift exceeds $500,000, full 50% rate applies: 

WGT = 50% × $2.9 million = $1.45 million 

 

 

 Example 5: Exempt Principal Place of Residence (PPR) 

Scenario:
A couple lives on a 1.5-hectare property in a semi-rural area. The land is rezoned from rural to residential. 

• Pre-rezoning value: $900,000 

• Post-rezoning value: $1.6 million 

• Uplift: $700,000 

Because the land is less than 2 hectares and is their PPR, they qualify for the PPR exemption. 

Result: WGT = $0 

 

For Property Buyers 

Before purchasing land, clients should request a Property Clearance Certificate from the State Revenue Office (SRO). This certificate will show: 

• Any due or unpaid WGT. 

• Any deferred WGT amounts. 

• Whether interest or penalty tax applies.