Windfall Gains Tax undergoes changes

As of January 1, 2024, the Windfall gains tax underwent changes that will impact vendors and purchasers. The tax is currently applied when there is an increase in the value of land due to rezoning or other changes by the Government to land use regulations. For example, if rural land is rezoned for residential use, the value of the land increases significantly. Currently, during the sale of this land vendors can add clauses into the contract which distribute partial payment of the windfall tax to the purchaser. However, this will no longer be the case from the start of January 2024.

After the changes take effect, the vendor will be responsible for paying the entire windfall tax, with the exception of high-value property transactions (10 million or greater). This means that purchasers will no longer be responsible for any portion of the tax. Although, keep in mind that these amendments do not impact contracts of sale of land entered into before 1 January 2024 (or, for windfall gains tax, options to enter into a contract of sale of land granted before 1 January 2024).

It is essential to be aware of these changes and to take them into consideration when entering into a contract of sale of land. Vendors should ensure that they account for the entire windfall tax when selling their land. It is always advisable to seek professional advice when dealing with significant financial transactions to ensure that you are fully informed of your obligations and rights.

We further note that it will be an offence for a Vendor to enter a Contract for Sale of land that requires a Purchaser to contribute to the Vendors land tax obligations. Noting that prior to January 2023, Land Tax was adjusted in the same manner as all other land liabilities such as Council Rates. These amendments do not impact Contracts of Sale entered into prior to 1 January 2024.

Duffy & Simon Lawyers are experts in property law and can provide you with the guidance and advice you need to ensure that you are meeting your obligations. We can help you understand the applicable laws and regulations, as well as assist you with any disputes or issues that may arise.

For more information or clarification around your land tax obligations please contact us today to discuss.