The subdivision of land in growth areas of Melbourne (and some other greenfield land in Victoria) can attract seemingly hidden levies and taxes such as ‘Development Contributions’, ‘Growth Area Infrastructure contributions’, ‘Community levies’, ‘Public Open Space Contributions’ and ‘Service Authority Levies’. These charges should be a major consideration in any decision to purchase or subdivide land.
Whether development contributions are payable upon the development of the land can be identified by reviewing the relevant planning scheme. If the land is located within an area shown as being included within a Development Contributions Plan Overlay it is a fair bet that contributions will be payable.
Growth Area Infrastructure contributions (GAIC),
GAIC is payable on the first relevant property transaction on land bought into the Urban Growth Boundary around Melbourne in 2005-2006 and in 2010. A relevant transaction can include the subdivision of land, a dutiable transaction and some building permits.
Community levies are typically stated in a Development Contributions Plan. These can be identified by reviewing the relevant planning scheme.
Public Open Space Contributions;
There are two main ways by which a council can require that a public open space contribution be made;
(i) Section 18 of the Subdivision Act 1988 may be applicable where there is no stated requirement in a planning scheme.
(ii) Clause 52.01 ‘Public Open Space Contributions and Subdivision’ of a planning scheme
The contribution amount charged under the provisions of the Subdivision Act can be challenged at VCAT however your ability to challenge the amount under the planning scheme is limited. Some two lot subdivisions may be exempt from a Public Open Space contribution and it is only payable once for any given parcel of land. A historical search can reveal if it has already been previously paid.
Service Authority Levies;
Authority levies/infrastructure charges/water quality contributions are charges imposed by service authorities such as Melbourne Water or South East Water etc.
Further analysis of whether the above charges are applicable to your next purchase or land subdivision either in Melbourne or other parts of the State can be undertaken by our knowledgeable and enthusiastic Town Planners at KLM Spatial.
Federal & State Taxes
Taxes incurred during and after the development phase, such as Capital Gains Tax, Land Tax, Stamp Duty and GST should also be factored into any purchase and proposed development. You should consult your accountant or financial advisor in this regard before purchasing a development site. Ensuring that you have the optimal taxation and ownership structure can make a huge difference to your project budget.
We know our limitations! For taxation advice, the friendly team at KLM Spatial can refer you to expert property taxation specialists upon request, (for everything else – give us a call).