Developers and purchasers of land in Victorian growth areas (or an interest in a land rich entity which holds land in a Victorian growth area) on or after 2 December 2008 need to consider their existing and potential liability for the Growth Areas Infrastructure Contribution and take appropriate action now.
The Planning and Environment Amendment (Growth Areas Infrastructure Contribution) Act 2010 (Vic) came into force on 1 July 2010. The Act introduces a new Growth Areas Infrastructure Contribution (GAIC) in Victoria which:
- will be used to fund State infrastructure and associated costs in growth areas; and
- may be payable by developers and purchasers of land (or interests in land rich entities) in Victorian growth areas.
What land is affected?
The GAIC will potentially be levied on land which:
- has been included within the Urban Growth Boundary (UGB) since 28 November 2005 or is included within the UGB in the future;
- is declared by the Victorian Minister for Planning to be within a growth area;
- is zoned residential, industrial, business, comprehensive development, priority development or urban growth; and
- is located within the municipal boundaries of Casey City Council, Cardinia Shire Council, Hume City Council, Melton Shire Council, Whittlesea City Council, Wyndham City Council or Mitchell Shire Council.
How much is the GAIC?
The GAIC is payable at the rate of:
- $80,000 per hectare for all affected land brought within the UGB between 28 November 2005 and 31 December 2006; and
- $95,000 per hectare for all other affected land,
and will be indexed annually to CPI. However, it will only be payable once in relation to a particular parcel of land.
What triggers liability for the GAIC?
Liability for the GAIC arises on the happening of the first GAIC event to occur in relation to affected land after 1 July 2010 which is not exempt. However, as a result of transitional provisions, liability for the GAIC may have already arisen as a result of transactions that have occurred in relation to affected land since 2 December 2008.
GAIC events are:
- the issue of a statement of compliance for a plan of subdivision of affected land;
- an application for a building permit to carry out building work on affected land; and
- dutiable transactions relating to affected land.
Who is responsible for paying the GAIC?
|GAIC event||Person liable to pay the GAIC|
|Issue of a statement of compliance||The owner of the affected land immediately after the statement of compliance is issued|
|Application for a building permit||The owner of the affected land immediately after the application is made|
|A dutiable transaction||The transferee|
When must the GAIC be paid?
The GAIC must be paid within three months after liability for the GAIC arises unless
- there is a deferral of the GAIC liability; or
- the GAIC event which triggers liability for the GAIC is an application for a building permit.
In the latter case, liability for the GAIC arises before the building permit issues.
Can liability for the GAIC be deferred?
A person liable to pay the GAIC as a result of a dutiable transaction in relation to affected land may elect to defer:
- up to 100% of their liability if the dutiable transaction occurred before 1 July 2010 and relates to land brought within the UGB between 28 November 2005 and 31 December 2006, in a growth area and zoned residential, industrial, business, comprehensive development, priority development or urban growth; and
- in all other cases, up to 70% of their liability,
until such time as a statement of compliance issues in relation to, or an application is made for a building permit to carry out building work on, the affected land.
Liability for the GAIC which is deferred will be indexed to CPI in most cases until a Precinct Structure Plan in relation to the affected land is gazetted, after which time interest will accrue on the amount of the GAIC which has been deferred and not paid, at the 10 year bond rate applying from time to time. In cases where a person is eligible for a 100% deferral, liability for the GAIC will be indexed until it is paid or an approval is granted for the GAIC to be paid in stages (whichever is earlier).
If liability for the GAIC is deferred, the person liable cannot later make an application for reduction of, or exemption from, the GAIC or apply to the Hardship Relief Board for relief from liability to pay the GAIC (see below).
Can payments of the GAIC be staged?
If a statement of compliance is issued or an application for a building permit is made (or one of those things is imminent), a person who is (or will be) liable to pay the GAIC may apply to the Minister for Planning for approval to make payments of the GAIC in stages. Note however, that interest will accrue on amounts outstanding under a staged payment approval.
Are there any exemptions and concessions?
Certain exemptions and concession apply in some circumstances where the GAIC would otherwise be payable. The exemptions and concessions are many and varied and advice should be sought by anyone with a potential liability for GAIC to determine if an exemption or concession applies to them.
In addition, a Hardship Relief Board has been established to whom applications for relief from liability for the GAIC may be made.
What action do you need to take now?
If you are the holder of land, purchased land on or after 2 December 2008, or intend to purchase land, in a Victorian growth area (or an interest in a land rich entity which holds land in a Victorian growth area), you need immediately:
- to consider your existing or potential liability for the GAIC;
- if you have an existing liability to pay the GAIC, you need to make the necessary payment to the State Revenue Office, or apply for:
- a deferral of your liability to pay the GAIC;
- a staged payment approval;
- any available reduction or exemption from liability for the GAIC; or
- relief from liability for the GAIC to the Hardship Relief Board.
- if you are selling or intend to sell your land, to ensure that your Vendor's Statement discloses any potential liability for the GAIC; and
- to determine if a potential liability for the GAIC has been noted on your title;
- if you wish to register a transfer of land, register a plan of
subdivision or obtain a building permit in respect of your land and
a potential liability for the GAIC has been noted on your title,
obtain a certificate from the State Revenue Office to confirm that:
- you have paid the GAIC;
- the GAIC is not payable; or
- an approval has been granted to defer payment of the GAIC.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.