Article by Arthur Chong, Judith Perlstein and Jane Tiller
The Victorian State Government has now released its draft Planning and Environment Amendment (Growth Areas Infrastructure Contribution) Bill.
The draft is open for public comment until 5pm on Monday, 2 November 2009.
Deacons released a legal update on the GAIC levy – Melbourne @ 5 million – growth areas infrastructure levy requirements - in February 2009.
The main features of the bill representing new or altered policy from that previously proposed are as follows:
Payment of Contribution
- Purchase / Transfer - The contribution will be payable by the purchaser on settlement of the purchase or transfer. This is a departure from the original intention that the vendor would be responsible for payment of the GAIC. The GAIC is triggered by settlement and payable within three months of settlement and prior to registration of the transfer of land.
- Subdivision - The GAIC payable for subdivision will be the responsibility of the land owner. The liability will be triggered by the issue of a statement of compliance for the plan of subdivision and payable within three months of the issue of the statement of compliance and prior to application to register the subdivision.
- Building Permit - The GAIC payable on the application for a building permit will be payable by the land owner. The liability is triggered by the building permit application and payable before the issue of the building permit.
The draft legislation has introduced two methods by which the GAIC can be deferred or staged to mitigate the timing impact of the contribution.
- Deferred Payment by Purchasers
The purchaser will be able to elect to defer the payment of the contribution beyond the 3 months time period, with the following conditions:
- A deferral in excess of $2 million will require approval by the Treasurer.
- The deferred liability will be subject to interest. The rate of interest will be determined by the Treasurer each year but will not exceed the rate specified in the Taxation Administration Act 1997 (TAA).
- The deferred liability will be a charge on the land.
- The GAIC must be paid by the purchaser who incurred the liability before any part of the land can be on-sold to a subsequent purchaser.
- Staged Payments by Land Owners
These provisions apply to GAIC payments triggered by subdivisions and building permits. They allow for staged payments of the GAIC by landowners in large scale urban development, in the following circumstances:
- Land owners will apply to the Growth Areas Authority and the applications will be assessed against Ministerial Guidelines which are to be released as to what types of large land developments may be considered for staged payment application.
- Applications may be approved in full or in part, or subject to conditions regarding period for payment, the liability of subsequent purchasers on default, and interest payable.
- The interest rate must not exceed the TAA rate.
- The GAIC liability may become a charge on the land.
Existing Infrastructure Contribution Credits
Land owners with existing agreements and conditions relating to the provision of infrastructure may apply for approval to have their existing contributions 'credited' towards a GAIC liability.
Only agreements in place prior to the introduction of the GAIC legislation will be considered, and future 'in kind' agreements will generally not be considered as part of the ongoing GAIC process.
Other Relevant Matters
- Parties with a pre-existing binding sale arrangement before the relevant announcement date - 2 December 2008 or 19 May 2009 for the additional Investigation Area in Melton – are not liable to pay the GAIC. The next relevant sale, subdivision or development will trigger the GAIC.
- Transitional arrangements will apply to land that is sold, purchased, subdivided or developed from the relevant announcement date until the legislation comes into effect.
- The GAIC will apply to each separate lot (title) that is subject to a GAIC trigger event and not to a land owner's or purchaser's total land holding.
- There will be a number of listed exemptions, such as procedural subdivision exemptions.
- The GAIC legislation is expected to be presented to Parliament for consideration next year.
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.