Victorian tax changes

The 2021-22 Victorian budget included a number of changes to Victorian taxes, including the introduction of a “windfall gains tax” (“WGT”).  However, a number of measures (including the WGT) were not implemented at that time. The Windfall Gains Tax and State Taxation and Other Acts Further Amendment Bill 2021 (Vic) (Bill) was introduced into the Victorian Parliament earlier this week seeking to legislate the outstanding measures.

Duties Changes

There are relatively minor changes to duties, principally to extend the motor vehicle duty exemption for vehicles that are specially converted for wheelchair access.

Land Tax Changes

A number of amendments to land tax are included in the Bill:

Build to rent (BTR) concessions

The Bill seeks to introduce a land tax concession and an exemption from the Absentee Owner Surcharge (AOS) for land used for certain BTR developments. The concession provides a 50% reduction on the taxable value of land used for an eligible BTR development, and introduces an exemption from AOS for land used for an eligible BTR development throughout a 15 year eligibility period.

We are in the process of comparing the BTR concessions with other states (namely New South Wales and South Australia), and will provide more detail in a comparative context shortly.

Tightening of charitable and not for profit exemptions

The Bill seeks to tighten a number of exemptions for charitable and not for profit organisations. Charitable institutions will be required to occupy land exclusively for charitable purposes to be eligible for a land tax exemption. A charitable ownership requirement will extend to exemptions for land leased for outdoor sporting, outdoor recreational, outdoor cultural or similar outdoor activities.

Removal of exemption for “gender-exclusive” and “gender-restrictive” clubs

The Bill seeks to remove the land tax exemption for non-racing clubs from private gender-exclusive and gender-restrictive clubs. A “gender-exclusive club” means a non-racing club which excludes persons from membership on the basis of a person's sex or gender identity. A “gender-restrictive club” means a non-racing club that was a gender-exclusive club on or after 20 May 2021, and no longer excludes persons from membership on the basis of a person's sex or gender identity.

It seems that the intent is that clubs will be considered “gender-exclusive” if all forms of membership are denied to a person on the basis of sex or gender identity. The concept of “gender-restrictive” seems to be an integrity measure as it only applies to former “gender-exclusive” clubs which change their membership requirements. Such clubs would need to demonstrate the following to retain the exemption:

• • the club is genuinely inclusive of members of any sex or gender identity; and
  • the purposes of the club are such that it is consistent with community interests and expectations that the exemption apply.

Leaving aside such subjective criteria, it is unclear whether, for example, “associate memberships” or the like would be enough to qualify for the exemption. It would also appear that clubs with gender “restrictions” but not “exclusions” which were not “gender-exclusive” on or after 20 May 2021 are not subject to the additional criteria.

Introduction of WGT

You can find more detail on the WGT here.

Other Tax Changes

The Bill also seeks to make amendments to:

• address technical errors contained in the formulas for the calculating the mental health and wellbeing surcharge in relation to payroll tax; and
• make changes in relation to Keno tax.