Windfall Gains Tax Victoria: What Property Buyers and Sellers Need to Know

On 1 July 2023, Victoria introduced a new tax that caught many property owners — and buyers — by surprise. The Windfall Gains Tax (WGT) can claim up to 50% of the upliftin a property's value when the land is rezoned by a planning authority. On a $1 million uplift, that is a $500,000 tax bill.

If you are buying land anywhere in Victoria — particularly development-ready sites, rural land near growth corridors, or properties that have recently had a rezoning application lodged — you need to understand how WGT works and where the liability can land on you as the buyer.

What is the Windfall Gains Tax?

The Windfall Gains Tax is a Victorian state tax introduced under the Windfall Gains Tax and State Taxation and Other Acts Further Amendment Act 2021. It applies when land is rezoned in a way that materially increases its value, and the uplift in value exceeds certain thresholds.

Unlike stamp duty (which the buyer pays) or capital gains tax (which the seller pays on profit), WGT is payable by the landowner at the time the rezoning takes effect. That could be the seller — but in some circumstances, liability can pass to the buyer.

How much is the tax?

The rate depends on the size of the uplift in value:

• Uplift under $100,000— no WGT applies (below threshold).
• Uplift of $100,000 to $500,000— tax is charged on a marginal scale up to 62.5%, effectively phasing in.
• Uplift of $500,000 or more— the full flat rate of 50% of the total uplift applies.

“Uplift” is calculated as the difference between the capital improved value (CIV) of the land before the rezoning (the pre-WGT valuation) and the CIV after the rezoning (the post-WGT valuation). Both valuations are made by the Valuer-General Victoria.

Example: a rural block is rezoned from Farming Zone to Residential Growth Zone. The Valuer-General determines the pre-rezoning value was $1.2 million and the post-rezoning value is $3.5 million. The uplift is $2.3 million, and WGT of 50% — $1.15 million — is payable.

Who is liable to pay?

The primary liability sits with the owner at the time of the rezoning event. The rezoning event takes effect when the new planning scheme is gazetted.

However, the tax becomes payable at the next “dutiable transaction” — typically the next sale or transfer. You can elect to defer it for up to 30 years or until the next sale, whichever is sooner. That deferral accrues interest at the 10-year bond rate plus a margin.

What this means for buyers: if you buy a property that had a rezoning event in the past and the previous owner deferred the WGT, the liability transfers to you at settlement unless the contract expressly makes the seller responsible. This is a critical clause to check in the Contract of Sale.

Exemptions

Some rezoning events do not trigger WGT:

• Residential land under 2 hectares that is your principal place of residence.
• Rezonings between different residential zones (e.g. NRZ to GRZ) — these are excluded entirely.
• Rezonings to or from the Urban Growth Zone.
• Rezonings that occur as part of a Growth Areas Authority precinct structure plan — these are subject to GAIC instead.
• Charitable organisations and registered religious bodies (under limited conditions).
• Rezonings that correct an administrative error.

What buyers should check in the Section 32

Vendors of land that has had, or may soon have, a rezoning event should disclose the WGT status in the Vendor's Statement. Look specifically for:

1. A WGT Statement from the State Revenue Office, showing whether WGT has been assessed, the amount, and whether deferral has been elected.
2. Zoning information on the planning certificate. Compare it against the zoning in the last 2–3 years — a recent change could mean an unpaid WGT assessment is waiting.
3. Any special condition in the Contract of Sale relating to WGT liability. Read it carefully — some developer-friendly contracts push WGT onto the buyer without highlighting it.
4. Council rates notice references to WGT. The SRO registers a charge over the title once WGT is assessed.

Common misconceptions

“It's only for developers.” False. Any landowner whose property is rezoned can be liable, including people who inherited the land or own small rural blocks.

“My house can't be affected.” Only if the land is under 2 hectares andis your principal place of residence. Otherwise, residential land is not automatically exempt — including investment properties and holiday houses.

“The Section 32 will warn me.” Vendors are supposed to disclose, but disclosure rules around WGT are still maturing. An automated contract review can flag recent zoning changes that may indicate WGT exposure.

What to do before you sign

1. Search the property address on the State Revenue Office's public WGT register.
2. Check the planning zone on VicPlan and review the zoning history. See our step-by-step VicPlan guide for how.
3. Ask your solicitor or conveyancer to insert a vendor-pays WGT clause into the Contract of Sale if any WGT is outstanding or likely.
4. Budget for the possibility that deferred WGT becomes payable at your settlement.

WGT is a tax most buyers have never heard of until it appears on their settlement statement. Catching it at the Section 32 review stage is the single best way to avoid a six- or seven-figure surprise. Upload your contract to precontractreview.com for an automated first-pass check — and always get a solicitor's review before signing.