On 11 October 2016, the State Taxation Acts Further Amendment Bill 2016 (Bill) was introduced to the Victorian State Government. The Bill proposes key changes to the payment regime of the Growth Area Infrastructure Contribution (GAIC) on public purpose land in Victoria under the Planning and Environment Act 1987 (Vic) (Act).
At present, subdivisions are often structured in a manner that begins by subdividing out lots required for utilities and public infrastructure by relying on the ‘excluded subdivision’ exemption under the Act. The practical effect of this approach was that GAIC may never be paid on those utility and transport infrastructure lots.
Under amendments proposed by the Bill, the ‘excluded subdivision’ exemption for land required for a utility installation, transport infrastructure or other public purpose, has been removed. GAIC will now be payable on subdivisions which create lots for these purposes within three months of subdivision.
In an effort to continue to encourage the early subdivision of land required for a particular public purposes, subdivisions of land for utility installations and transport infrastructure will not trigger GAIC on the balance on the land within those subdivisions. GAIC payable on this public purpose land cannot be the subject of a staged payment arrangement but staging can be undertaken on the balance land.
The amendments will not affect plans of subdivision which have been lodged for certification prior to 12 October 2016.
The exemption for the subdivision of land to solely provide a lot for a school remains, together with existing exemptions for subdivisions by a public or municipal authority, realignments not exceeding 5% for either lot, creating lots not exceeding 2 hectares, excising an existing dwelling or creating two lots, one of which is within the contribution area. All these exempt subdivisions must be solely for these purposes in order to be exempt.
The amendments provide clarification on the question of whether the exclusion of particular subdivisions removed the requirement to pay GAIC on land required for a utility installation, transport infrastructure or other public purpose. The plaintiffs in the case of Frontlink Pty Ltd v Commission of State Revenue  VSC 2016 argued that the excluded subdivisions had the effect of reducing that area on which GAIC was payable. It has been the Victorian Government’s position that GAIC is payable on all land within the contribution area and not just on developable land. The Bill now gives effect to the Victorian Government’s policy intentions, however, that legislative certainty comes at the developer’s cost.