In brief 

The Victorian Government proposes to introduce a new tax known as the Social and Affordable Housing Contribution (SAHC) from 1 July 2024. This is to be done through amendments to the Planning and Environment Act 1987. The tax will be payable on eligible planning permits from 1 July 2024 onwards.

The stated object of the SAHC is to "grow the supply of social and affordable housing in Victoria".

The amount of tax is proposed to be 1.75% of the market value of new residential developments of three or more dwellings, or of three or more residential lot subdivisions.

The proposed contribution will apply to developments or subdivisions in metropolitan Melbourne, Ballarat, Greater Bendigo and Greater Geelong. Tax collected would be held in a "Social Housing Growth Fund" and allocated to community housing agencies to deliver new social housing projects across Victoria. The landowner undertaking the development will pay the SAHC.

Legislation is yet to be released.

The proposed SAHC comes in the wake of the Windfall Gains Tax applying to increases in the value of certain land resulting from rezoning commencing on 1 July 2023 Australia: Windfall Gains Tax and the increase in the highest duty rate from 5.5% to 6.5% from 1 July 2021.

We will provide an update once draft legislation or a bill is available.