What is the Victorian windfall gains tax?
The Victorian windfall gains taxExternal Link (WGT) is a tax that may apply if there is an uplift in the value of land due to rezoning in Victoria. It is imposed by the Victorian State Government and administered by the Victorian State Revenue Office.
There are a number of exemptions or exclusions from WGT, including for:
- residential land
- charitable and university land
- certain types of rural rezoning.
A landowner becomes liable for the WGT at the time of the rezoning event but may generally choose to defer payment of the liability. However, interest can accrue on the deferred WGT liability.
If you own land in Victoria, see exemptions and exclusions from WGTExternal Link for more information.
Vacant land
If your land is ‘vacant land’ for tax purposes, you may not be entitled to a deduction for the WGT. For more information, see Deductions for vacant land.
WGT and CGT cost base
Generally, costs incurred in purchasing, holding and selling land that are not deductible will form part of the cost base for working out a capital gain on that land.
This means the WGT you incur can form part of the third element of the cost base of land (but only if that land was acquired after 20 August 1991), as a cost of owning the CGT asset. This also applies to interest that has accrued on a deferred WGT liability.
Example: WGT becomes part of CGT cost base
Monica owns vacant land in outer Melbourne. On 1 February 2024 her land is rezoned and the Victorian State Revenue Office issues Monica a WGT assessment.
Monica has a WGT liability of $125,000 due to the rezoning and uplift in value of her land. Monica has incurred this expense as a cost of owning her land.
As the land is ‘vacant land’ for income tax deduction purposes, Monica is not entitled to a tax deduction for the WGT expense.
Monica chooses to defer payment of the WGT liability. On 31 March 2025, Monica sells the land. When Monica sells the land, she needs to pay the WGT liability. Monica pays the WGT liability to the Victorian State Revenue Office.
Monica calculates her capital gain on the sale of her land and uses a CGT cost base that includes the $125,000 WGT amount, plus any interest accrued on that amount.
End of exampleFor more information, see: