Windfall Gains Tax Victoria: Property Developer Guide

If a rezoning lifts the value of your Victorian land by more than $100,000, windfall gains tax (WGT) may take up to half of that uplift. The tax has applied to rezonings since 1 July 2023, it is charged at 62.5% or 50% depending on the size of the uplift, and it lands on whoever owns the land on the day the rezoning takes effect, whether or not they asked for it. For a developer, that changes the maths on any strategy built around buying land ahead of a zone change. The gross uplift you see in a rezoning play is no longer yours; roughly half of it may belong to the State Revenue Office (SRO) before you have lodged a single permit application.

This guide works through how windfall gains tax (WGT) is calculated, which rezonings trigger it and which are excluded, the exemptions, the pay-or-defer decision, the ban on passing the tax to a purchaser, the income tax treatment, and what all of it does to the feasibility of a rezoning-led deal. Victoria is currently the only Australian state with a tax like this, so if your pipeline is entirely outside Victoria, the short version is that windfall gains tax (WGT) most likely does not apply to you. The interstate position is covered near the end. None of this is tax or legal advice. The tax turns on your own land, your structure and the current law, so treat it as a map and confirm the position with the State Revenue Office (SRO) and your own adviser before you act.

What is windfall gains tax and who pays it?

Windfall gains tax (WGT) is a Victorian state tax on the increase in land value caused by a rezoning, payable by the owner of the land at the time the rezoning takes effect. It commenced on 1 July 2023 under the Windfall Gains Tax Act 2021 and is administered by the State Revenue Office (SRO) of Victoria. It applies where the rezoning produces a taxable value uplift of more than $100,000, measured as the change in the land’s capital improved value (CIV).

Two features catch developers off guard. First, the tax is triggered by the rezoning itself, not by a sale. You can owe a seven-figure windfall gains tax (WGT) liability on land you have no intention of selling, with no cash event to fund it. Payment can generally be deferred, with interest, which is covered below. Second, you do not need to have sought the rezoning. A council-led or state-led planning scheme amendment that sweeps your land into a new zone can create the liability just as surely as your own planning proposal, a point the Victorian Department of Treasury and Finance makes in its explanation of the tax’s policy basis: the uplift comes from a government decision, so the government takes a share.

Ownership is assessed on an aggregated basis. If you, or entities grouped with you, own several parcels rezoned under the same planning scheme amendment, the uplifts are added together and the tax is assessed on the total, as Rigby Cooke’s tax alert on the windfall gains tax explains. Splitting a landholding across related companies or trusts generally will not keep each parcel under the threshold.

How much windfall gains tax will you pay?

For uplifts between $100,000 and $500,000, windfall gains tax (WGT) is 62.5% of the part of the uplift above $100,000. Once the uplift reaches $500,000, the rate becomes a flat 50% of the entire uplift, with no tax-free slice. The State Revenue Office (SRO) explanation of how the tax works sets out the bands:

Worked through, a $300,000 uplift produces a liability of $125,000 (62.5% of $200,000), an effective rate of about 42% on the whole uplift. A $3 million uplift produces a liability of $1.5 million. The two bands are designed to meet: at an uplift of exactly $500,000, the 62.5% formula gives $250,000 and the 50% formula gives $250,000, so there is no cliff where one extra dollar of uplift suddenly costs you tens of thousands. What the design does mean is that every serious rezoning play, anything with an uplift in the millions, sits squarely in the 50% band.

Because of aggregation, three parcels held by the same owner or group, each with a $150,000 uplift under one amendment, are taxed on a combined $450,000 uplift (a $218,750 liability), not assessed individually at $31,250 each. On larger uplifts the aggregation question matters less, because everything is in the flat 50% band anyway, but for smaller infill holdings it can be the difference between a modest liability and none.

Which rezonings trigger windfall gains tax, and which are excluded?

Most rezonings between different zones trigger windfall gains tax (WGT), but several categories are excluded, and the exclusions map closely to where Victoria already captures value through other channels. Per the State Revenue Office (SRO) list of exemptions and exclusions and Rigby Cooke’s summary, the main excluded rezonings are:

• A change from one schedule to another within the same zone. Moving from Farming Zone Schedule 1 to Farming Zone Schedule 2 is not a windfall gains tax (WGT) event, even if it changes what you can do with the land.
• Certain rezonings within the growth areas infrastructure contribution (GAIC) area, broadly rezonings to and from the Urban Growth Zone in Melbourne’s designated growth corridors. The Victorian Planning Authority’s guidance on rezoning and the tax confirms the logic: that land already pays a growth areas infrastructure contribution (GAIC), so it is carved out rather than taxed twice.
• Rezonings to a public land zone, or between public land zones.
• Rezonings into conservation-type rural zones: the Green Wedge Zone, Green Wedge A Zone, Rural Conservation Zone, Farming Zone and Rural Activity Zone.
• Rezonings that correct an obvious or technical error in the planning scheme.

The Treasurer can also declare further excluded rezonings. For a developer, the practical geography is this: a greenfield play inside the growth areas infrastructure contribution (GAIC) corridors generally deals with the growth areas infrastructure contribution (GAIC) regime rather than windfall gains tax (WGT), while a regional englobo site, an industrial-to-residential conversion, or an infill site rezoned outside those corridors is squarely in windfall gains tax (WGT) territory. If your strategy involves land near Victoria’s priority precincts, it may be worth reading this alongside our guide to the Plan for Victoria and the Development Facilitation Program, since state-led rezoning activity is exactly the kind of event that can crystallise the tax.

What exemptions and transitional relief apply?

The main exemption for private owners is residential land: up to 2 hectares of residential land rezoned under one amendment is exempt, and pre-existing contracts and rezonings that were already underway before the tax was announced on 15 May 2021 may qualify for transitional relief. The detail matters, so taking each in turn:

• Residential land, up to 2 hectares. Land with a dwelling on it (including primary production land with a residence) is exempt up to 2 hectares per owner or group per amendment, whether or not it is the owner’s principal place of residence, as the State Revenue Office (SRO) residential land exemption page sets out. Own 3 hectares and only 2 are sheltered; the balance is taxed on a proportionate share of the uplift. Adjoining farmland on a separate title without a dwelling does not get the exemption, even if it is farmed as one property.
• Charitable and university land. Land owned by a charity and used exclusively for charitable purposes can have the tax waived, conditional on the land continuing in charitable use for 15 years after the rezoning. Sell or repurpose it inside that window and the waived tax can come back.
• Negative uplift. If a later event shows the rezoning actually reduced value, the State Revenue Office (SRO) reassesses and refunds tax and interest paid on the original event.
• Transitional relief. Contracts entered before 15 May 2021 but settled after 1 July 2023, options granted before 15 May 2021 and not yet exercised or completed, and owner-initiated rezonings lodged and registered in the Amendment Tracking System before 15 May 2021 (where the owner had already spent above a threshold, being the lesser of 1% of the land’s capital improved value (CIV) and $100,000) may all escape the tax, per Rigby Cooke’s analysis. Three years on from commencement, this relief still matters for long-dated options and slow-moving amendments that predate the announcement.

There is no build-to-rent or affordable housing concession within the windfall gains tax (WGT) regime itself. If a project of that kind is rezoned, the tax applies on ordinary principles.

How is the uplift valued, and can you challenge it?

The taxable value uplift is the difference between the land’s capital improved value (CIV) before and after the rezoning, determined by the Valuer-General Victoria, and you have 60 days from the assessment to object, with no discretion for the State Revenue Office (SRO) to extend that window. The pre-rezoning value is generally the capital improved value (CIV) already in force for rates and land tax purposes; the post-rezoning value is a supplementary valuation reflecting the new zone.

Two separate objection paths exist, as Rigby Cooke notes: you can object to the valuations themselves (arguing the Valuer-General Victoria has overstated the uplift), or to the imposition of the tax (arguing an exemption, exclusion or the transitional rules apply). The 60-day clock is unforgiving, and rezonings rarely arrive unannounced, so if land you own is in the path of a planning scheme amendment, the time to brief a valuer on your own view of the before-and-after capital improved value (CIV) is before the assessment arrives, not day 55 after it.

It may also be worth being realistic about what a valuation objection can achieve. The before value is anchored to an existing published valuation you have probably never disputed, and the after value reflects a zoning you likely wanted. The stronger objections tend to be about the uplift attribution (how much of the value change is actually caused by the rezoning rather than by market movement between valuation dates) and about exemptions. Specialist valuation and legal advice generally earns its fee here; the amounts at stake dwarf the cost of advice.

When does the assessment arrive, and when do you have to pay?

The assessment generally arrives after the rezoning takes effect, once the Valuer-General Victoria has certified the before-and-after valuations, and the notice itself states the due date for payment. Two clocks start when it lands: a deferral election must be lodged before the day the tax falls due, and the 60-day objection window runs from the assessment, so the two biggest decisions on the tax arrive together and cannot be put off.

The sequence usually runs like this. The planning scheme amendment is approved and gazetted, which fixes the date of the windfall gains tax (WGT) event. The Valuer-General Victoria then determines the capital improved value (CIV) of the land immediately before and after the rezoning. The State Revenue Office (SRO) issues a notice of assessment to the owner, or across the group where holdings are aggregated, showing the taxable value uplift, the tax and the due date.

The useful thing about this sequence is how much of it is public before the notice exists. Planning scheme amendments are exhibited, debated and gazetted in the open, so a landowner watching the amendment generally has months of warning. That lead time is worth using: brief your own valuer on the before-and-after capital improved value (CIV) while the amendment is still in progress, decide the pay-or-defer question against your funding plan rather than under a deadline, and if an exemption or the transitional rules might apply, assemble the evidence before the assessment arrives. Developers who first engage with windfall gains tax (WGT) when the notice lands are giving away most of their room to move.

Should you pay or defer?

You can elect to defer up to 100% of a windfall gains tax (WGT) liability rather than paying by the due date, but deferral is a loan from the state, not relief: interest accrues at the 10-year Treasury Corporation of Victoria (TCV) bond rate, and the deferred amount plus interest becomes payable on the earlier of a sale, certain ownership changes, or 30 years. The mechanics, set out on the State Revenue Office (SRO) deferral page, reward attention:

• What ends a deferral. A dutiable transaction over the land (typically a sale), or a relevant acquisition in the landholder (broadly, half the shares in a private company or 20% of the units in a private unit trust changing hands), or 30 years passing, whichever comes first. Restructuring the ownership entity can crystallise the tax just as effectively as selling the land.
• What does not end a deferral. Subdividing the land does not trigger payment. The deferred liability, with its accrued interest, is instead apportioned across the child lots and travels with them, each lot then paying out its share as it sells. If subdivision is your exit, the liability follows you through it; our guide to subdivision in Victoria covers the broader process this sits inside. Transfers for no consideration and certain other excluded transactions also leave a deferral intact.
• The interest rate. The 10-year Treasury Corporation of Victoria (TCV) bond rate is published by the State Revenue Office (SRO) and moves with the bond market. It was 5.12% per annum as at 31 December 2024, and practitioner commentary through 2025 quoted it near 4.7%; check the State Revenue Office (SRO) election-to-defer page for the current figure before you model it. On a $1.5 million deferral, around 5% is roughly $75,000 a year of accruing cost.
• Part payment. You can defer part and pay part. But any non-deferred amount left unpaid by the due date voids the arrangement and makes the whole liability immediately payable, so the election paperwork deserves care.
• The charge on title. Unpaid or deferred windfall gains tax (WGT) is a first charge on the land, ranking ahead of any mortgage, as Webb Martin Consulting’s analysis highlights. Senior lenders know this, and a large deferred liability sitting in priority ahead of their security may affect how much they will lend against the land, or whether they require the tax to be cleared at or before financial close. Purchasers and financiers can see the position through a property clearance certificate, which shows windfall gains tax (WGT) secured on the land.

The pay-or-defer decision is ultimately a cost-of-capital question, and the answer depends on your numbers. The factors that drive it are the return you can earn on the freed-up equity against the Treasury Corporation of Victoria (TCV) bond rate, whether the exit that ends the deferral also funds the payment, and how long the land will be held. Where the land is held long term with no funding event, the compounding interest, secured in priority on your title, can weigh against deferring. Which way it falls for your project is a decision to weigh with your accountant and adviser, not a general rule.

Can you pass windfall gains tax on to the buyer?

Not once it has been assessed. Since 1 January 2024, section 10H of the Sale of Land Act 1962 (Vic) makes any provision in a contract of sale or option void to the extent it requires the purchaser to pay a windfall gains tax (WGT) liability for which a notice of assessment had already issued when the contract or option was entered, with penalties of up to 60 penalty units for individuals and 300 for companies, as analyses by Johnson Winter Slattery and Herbert Smith Freehills Kramer explain. The same amendments banned apportioning land tax to purchasers under most contracts.

The prohibition covers known, assessed liabilities. It does not stop parties allocating the risk of a future rezoning: if land is rezoned after a contract is signed, the contract can still deal with who bears the resulting tax. That distinction shapes how rezoning-exposed deals are being structured:

• Buying after assessment. The vendor keeps the liability and will try to recover it through price. Your negotiating position is that the vendor’s uplift was never fully theirs; pricing off the after-tax uplift, not the gross uplift, is the honest starting point.
• Contracting before rezoning. Who carries a tax that lands mid-contract becomes a drafting question, and one worth real attention in due diligence. A purchaser who agrees to carry future windfall gains tax (WGT) is potentially absorbing half the uplift they thought they were buying.
• Options. Under a put and call structure, the grantor usually still owns the land when a rezoning takes effect, so the liability lands on them, and once assessed it cannot be pushed to the option holder under an option entered from 1 January 2024. Long-dated options over rezoning candidates deserve fresh drafting attention for exactly this reason; our guide to put and call options for developers covers the broader structure.

What should you check before buying land that has already been rezoned?

Three things: whether any windfall gains tax (WGT) is secured on the title, who the contract says pays it, and what happens if a further rezoning lands mid-contract. Rezoned land changing hands is exactly where the tax’s mechanics bite a purchaser, and the checks are cheap relative to what they protect.

• Order a property clearance certificate. The certificate discloses windfall gains tax (WGT) secured on the land, including deferred liabilities and accrued interest. Because unpaid tax is a first charge ranking ahead of mortgages, a purchaser who settles without checking can find the State Revenue Office (SRO) standing in front of their lender on title. The usual protection is a contract term requiring the vendor to clear the liability at or before settlement, out of the settlement proceeds.
• Watch subdivided lots. Where a parent lot carried a deferred liability and was later subdivided, the tax and its interest are apportioned across the child lots. A single townhouse lot in a completed subdivision can arrive with its slice of a rezoning that happened years earlier, which is precisely the situation the clearance certificate exists to surface.
• Read the tax clauses against section 10H. A term requiring you to pay the vendor’s already-assessed windfall gains tax (WGT) is void, and the vendor risks penalties for including it. But a void clause does not stop a vendor recovering the economics through price, so the sharper question in negotiation is whether the asking price impounds the gross uplift or the after-tax uplift.
• Allocate future rezoning risk deliberately. If the land might be rezoned again between contract and settlement, the parties can still agree who bears that tax, because the prohibition only covers liabilities already assessed when the contract was entered. Long settlements over rezoning candidates should not leave this to inference.

How does windfall gains tax interact with income tax, Capital Gains Tax (CGT) and GST?

Windfall gains tax (WGT) is generally not deductible when it is incurred on vacant land, but the Australian Taxation Office (ATO) accepts it can form part of the land’s Capital Gains Tax (CGT) cost base, and the interest on a deferred liability gets the same treatment. The Australian Taxation Office (ATO) guidance on the Victorian windfall gains tax, published in December 2025, confirms that non-deductible windfall gains tax (WGT) can be included in the third element of the cost base (costs of owning the asset) for land acquired after 20 August 1991, and that the vacant land deduction rules will often deny an outright deduction in the meantime.

For developers, though, the cleaner Capital Gains Tax (CGT) analysis may not be the one that applies. Most development projects hold land as trading stock or on revenue account, where profits are ordinary income and the cost base rules do not operate in the same way; our guide to capital gains tax for property developers covers that boundary in detail. Webb Martin Consulting’s technical analysis, written before the Australian Taxation Office (ATO) guidance of December 2025, argued the cost base position was genuinely uncertain and floated a business-related capital expenditure deduction under section 40-880 as an alternative for land used in a business. The revenue-account treatment of windfall gains tax (WGT) still has no published Australian Taxation Office (ATO) ruling behind it, so a developer carrying a large liability should treat the income tax outcome as a question for their adviser, not an assumption in the model.

On Goods and Services Tax (GST), the passing-on prohibition has a subtle effect: because an assessed windfall gains tax (WGT) liability cannot be added to the price, the tax is not part of the consideration on which GST is calculated, which in practice means the vendor absorbs the tax out of a GST-inclusive price. If you are selling rezoned land, the interaction between the tax, the margin scheme and your net position is worth working through carefully; our GST guide for property developers covers the margin scheme mechanics.

What does windfall gains tax do to the feasibility of a rezoning play?

It roughly halves the prize, and that needs to be in the model from the first back-of-envelope pass, not discovered at assessment. A worked example shows the shape of it.

Say you are looking at 4 hectares of regional englobo land, currently zoned Farming, asking $2 million, with a credible path to a residential rezoning that would support a capital improved value (CIV) of $5 million. The gross uplift is $3 million, and on the old maths the deal looks like it more than doubles your money before you turn a sod. Under windfall gains tax (WGT), the uplift of $3 million attracts tax of $1.5 million at the 50% rate. The net uplift is $1.5 million, before transfer duty on the way in, land tax and rates during the hold (our guide to land holding costs works through those), interest if you defer, selling costs on the way out, and income tax on whatever profit survives. A deal that looked like a triple is, after the state’s share and the friction, closer to a respectable but unremarkable margin, and it may no longer stack up at the $2 million asking price at all.

That is the real effect of the tax on developers: it moves value backwards into the land price negotiation. If the rezoning uplift will be shared with the state, the price you can justify paying for pre-rezoning land falls, and vendors holding out for prices that impound the full gross uplift are asking you to pay for value neither of you will keep. Working backwards from end value to a supportable land price is exactly what residual land value analysis is for, and it is worth running the deal both ways, with and without the rezoning, before you commit. This is also where feasibility software earns its keep: in Feasly you can model the rezone and no-rezone cases as side-by-side scenarios, carry windfall gains tax (WGT) and deferral interest as cost lines, and back-solve the residual land value under each, so the number you take into the negotiation already reflects the tax.

Two further modelling points. First, timing: the tax is assessed at rezoning, which may sit years before your exit, so a deferred liability accruing interest at around 5% is a real holding cost line, not a settlement-day adjustment. On the example above, deferring the $1.5 million liability adds roughly $75,000 a year, which across a three-year hold is in the order of $225,000 to $240,000 depending on where the published rate sits over the period. Second, funding: because the deferred tax ranks ahead of a mortgage on title, model the possibility that your senior lender requires it cleared at financial close, which drags the payment forward and changes your peak equity requirement. A sensitivity run on the uplift figure itself is also prudent, since the Valuer-General Victoria’s number may not match your own valuer’s, and at a 50% rate every dollar of disputed uplift is 50 cents of tax.

Does anything like windfall gains tax exist outside Victoria?

No other Australian state currently levies a broad rezoning windfall tax, so a multi-state developer only carries this line in Victorian feasibilities. The nearest relative is in the Australian Capital Territory, where the lease variation charge captures 75% of the value uplift when a Crown lease is varied to allow more valuable development. The mechanism is different (the Australian Capital Territory is leasehold, so the charge attaches to varying the lease rather than to a rezoning), but the economic effect on a redevelopment feasibility is similar, and at a higher headline rate.

New South Wales has periodically debated broad value capture on rezoning, and advocates continue to point to the billions in uplift its rezonings hand to landowners each year, but it has not legislated an equivalent, and its value capture remains transactional: infrastructure contributions and planning agreements negotiated through the development process. Queensland, South Australia, Western Australia, Tasmania and the Northern Territory likewise capture value through infrastructure contribution frameworks rather than a rezoning tax. New Zealand (NZ) has no equivalent either; a rezoning uplift there is untaxed unless the eventual sale is caught by the bright-line test or ordinary income rules on land dealing.

The absence of interstate equivalents is itself a feasibility input. Identical englobo strategies in Albury and Wodonga now carry materially different tax outcomes on either side of the Murray, and Victoria’s development lobby argues this is redirecting capital north, which leads to the final question.

Is windfall gains tax likely to change?

The law stands as described, and nothing before the Victorian Parliament as at mid-2026 would repeal or restructure it, but the tax is under sustained pressure heading into Victoria’s November 2026 election. The Property Council’s campaign against the tax, launched off the back of its November 2025 reform paper, cites Mandala Partners modelling claiming the tax raised just $15 million in 2024-25 while suppressing investment, and that abolition could lift private investment by up to $1.4 billion a year by 2030, delivering around 3,100 additional homes a year and 2,700 jobs. The paper’s nine reform proposals include crediting works-in-kind against the liability, binding pre-transaction assessments so buyers know the number before they contract, and aligning the tax with the government’s own rezoning facilitation programs.

Treat all of that as advocacy rather than prediction. The modelling is commissioned by the industry body campaigning for repeal, the government has shown no intention of walking away from the tax, and revenue that small cuts both ways as an argument. What a developer can bank is only the current law: a 62.5% and 50% tax on rezoning uplifts above $100,000, deferrable with interest, secured on title, and not payable by your purchaser once assessed. Model that, and treat any softening as upside.

Windfall gains tax (WGT) has not ended rezoning-led development in Victoria, but it has repriced it. The developers still making these plays work are the ones paying englobo prices that reflect the after-tax uplift, electing deferral with their eyes open to the interest and the first charge, and keeping the 60-day objection window and their own valuation evidence ready before the assessment arrives. The uplift is still real. It is just shared now, and your feasibility should say so.

This guide is general information for property developers, not legal, tax, or financial advice. Windfall gains tax rates, thresholds, exemptions, the deferral interest rate, and the surrounding law change, and every site and structure is different. Confirm the current position with the State Revenue Office of Victoria and your own legal and tax advisers before you rely on any figure here.