| Published by Wai-Hwoon Low, Suzanne Manson, Mark McKinley
Current position: excluded subdivisions
Currently, section 201RF of the Planning and Environment Act 1987 (Vic) (“P&E Act”) (“Section 201RF”) provides that GAIC is not payable in relation to a plan of subdivision if the purpose of the subdivision is solely to:
These subdivisions, and a small number of others, are known as “excluded subdivisions”.
Notwithstanding these provisions, the State Revenue Office (“SRO”) had long taken the view that a plan which created a road and a balance lot (which was to be later subdivided) is not an “excluded subdivision”. In other words, in order for such a plan to proceed, GAIC had to be paid when the statement of compliance for that plan was issued. The SRO’s position on this issue changed as a result of the Victoria Supreme Court’s decision in Frontlink Pty Ltd v Commissioner of State Revenue (“Frontlink”) earlier this year.
The decision in Frontlink
Land developers will be familiar with the Supreme Court’s decision in this case. By way of summary, Frontlink had a plan which created a road and a balance lot, and the SRO took the view that Frontlink’s plan was not an “excluded subdivision”. The Supreme Court decided the matter in Frontlink’s favour, in essence saying that such a plan could have, and in this case did have, the sole purpose of providing land for transport infrastructure. In other words, GAIC was not payable in relation to that plan of subdivision.
The SRO did not appeal the Supreme Court decision. Since then, the SRO has, where appropriate, considered plans creating a road and a balance lot, as “excluded subdivisions”.
The new Bill - removal of some “excluded subdivisions” and new definition of “public purpose land”
The Bill seeks to remove plans which create a lot for a utility installation, and also plans to provide land for transport infrastructure or any other public purpose from being “excluded subdivisions”. In other words, the Bill seeks to negate the effect of the Supreme Court’s decision in Frontlink by legislating that these types of plans are no longer exempt from GAIC.
The Bill does not seek to make any change to plans which have the sole purpose of creating school sites. Therefore, school sites will remain exempt from GAIC.
The Bill also expressly provides that GAIC will now be payable on “public purpose land”. “Public purpose land” is broadly defined under the Bill. In effect, the new definition means that developers will now be required to pay GAIC on land which has a purpose of a utility installation, transport infrastructure or any other public purpose (excluding those limited excluded subdivisions which remain in Section 201RF).
Public purpose land - apportionment and payment of GAIC
The Bill deals with the apportionment and calculation of GAIC which is payable in relation to a plan of subdivision where the sole purpose is to provide for public purpose land. In effect, GAIC is payable in relation to the public purpose land within three months of the statement of compliance. In relation to the balance of the land in the plan, GAIC will be payable on the occurrence of the next GAIC event which affects that balance of the land.
Importantly, a land owner can no longer apply for a staged payment arrangement in relation to any plan of subdivision where the sole purpose is to provide for public purpose land. Given the three month time frame to pay the GAIC in relation to public purpose land, developers must factor such payment into their cash flow projections and feasibilities.
Land dealings involving public authorities and councils
The Bill also proposes to repeal section 201TC(2) from the P&E Act. This will means that GAIC will be payable in respect of the acquisition (either by agreement or compulsion) of GAIC-affected land by a public authority or council under Part 2 of the Land Acquisition and Compensation Act 1986 (Vic). GAIC will be now be triggered on any such dealing with that land in a manner which is consistent, from a policy perspective, with the new requirement to pay GAIC on public purpose land.
Strategy and recommendation
Clearly, with the new Bill, the categories under which developers, land owners, public authorities and councils can seek certificates of no GAIC liability or GAIC exemption have been reduced since such certificates for roads and other public land will no longer be available. In addition, GAIC on plans where the sole purpose is to create “public purpose” lots must be paid within three months of the issue of the statements of compliance.
If the Bill is passed, we recommend that instead of preparing separate plans of subdivision solely to carve out public purpose land at the start of the development (as is currently the preferred practice), developers should instead consider creating such lots at the end of the project if this is possible. Alternatively, developers could simply create any lots set aside for public purposes within the relevant staged plan of subdivision in their development, as and when required.
Public authorities and councils may still be able to rely on some of the other GAIC exclusions/exemptions that remain in the P&E Act when dealing with GAIC-affected land.
If the Bill is passed in its current form, developers will need to include GAIC payments on public purpose land in their budgets and take into account the timing for payment of that GAIC into their feasibilities. The upshot of these changes is that more GAIC will be payable, as developers will no longer be able to obtain certificates of no GAIC liability for the categories of excluded subdivisions that are to be removed by the Bill.
Unless other exclusions/exemptions apply, GAIC will also be payable on public purpose land acquired by public authorities and councils.
Owners corporation rules are only lawful if the owners corporation has the power to make those rules.
Amendments to the State Taxation and Other Acts Amendment Bill 2016