Growth Areas Infrastructure Contribution - will you have to pay?
by Craig Whatman and Jack Wang, Pitcher Partners
What is Growth Areas Infrastructure Contribution?
The Growth Areas Infrastructure Contribution (GAIC) is a new tax which the Victorian Government is seeking to impose on developable land within Melbourne's Urban Growth Boundary (UGB).
Types of land affected and the GAIC rates
In order to be subject to the GAIC, the land must be within the Contribution Area. The land in the Contribution Area is divided into several categories.
Type A land GAIC of $80,000 per Hectare. This is land that was brought within the UGB between 28 November 2005 and 31 December 2006 and which is within an Urban Development Area on or after 2 December 2008.
Type B1 land and Type B2 land GAIC of $95,000 per Hectare. This is land that is within any of the 7 Investigation Areas for the expansion of the UGB and which is brought within a growth area, the UGB and an Urban Growth Zone on or after 2 December 2008 or 19 May 2009 (depending on the Investigation Area).
Type C land GAIC of $95,000 per Hectare. This is land that is brought within a growth area and an Urban Growth Zone on or after the commencement date of the GAIC legislation.
The GAIC will be indexed annually from July 2010 based on the Construction Index.
Who is liable to pay the GAIC?
The imposition of the GAIC will be triggered when the relevant GAIC event occurs. The GAIC will be payable once only upon the occurrence of the first GAIC event. The person liable to pay the GAIC will depend upon the relevant GAIC event, as set out in the following table:
|GAIC event||Person liable to pay the GAIC|
|Dutiable transaction||Transferee for stamp duty purposes|
|Statement of compliance for plan of subdivision||Owner of land immediately after statement issued|
|Application for building permit||Owner of land immediately after application made|
|Sub-sale of dutiable property||Transferee of property (subsequent purchaser)|
|Significant acquisition (in land rich landholder)||Person who makes acquisition and land rich landholder (joint and several liability)|
Exemptions from the GAIC
The GAIC legislation provides specific exemptions from the GAIC. Included within the exemptions are:
- a dutiable transaction relating to land if the agreement relating to that transaction was entered into before 2 December 2008 (for the majority of land in the Contribution Area);
- a dutiable transaction relating to land that is made for no consideration;
- certain transactions that are exempt from stamp duty, including transactions relating to a change in trustee, transfers to and from a trustee or nominee, transfers between superannuation funds, transfers to beneficiaries of deceased estates, and transfers as a result of marriage breakdown;
- a transfer of land by the owner to a complying superannuation fund, or a transfer of land from the trustee of a complying superannuation fund to a beneficiary;
- any land that is the subject of a GAIC event if the land has a total lot area of 0.41 hectares or less;
- any land that is the subject of a dutiable transaction, where the land has a total lot area of between 0.41 hectares and 2.03 hectares and there was an habitable dwelling on the land immediately before the occurrence of the transaction;
- a subdivision to create a lot not exceeding 2 hectares for the purpose of excising an existing dwelling on the land;
- an application for a building permit for the construction of a single dwelling; and
- an application for a building permit for work with a value less than $1 million.
Commencement date of the GAIC
The Government was originally aiming for the GAIC to commence in late 2009 or early 2010. However, the Opposition and the Greens joined together in the last sitting week of Parliament to defer debate on the legislation until Parliament resumes sitting in February 2010. At the date of writing this article, it remains unclear when the GAIC will commence and whether the Government may be forced to concede amendments to the legislation in order to get it passed.