Published on 16/11/2009

Property holders may soon be required to pay the Growth Areas Infrastructure Contribution (GAIC) on certain property transactions occurring in Melbourne’s growth areas.

The Planning and Environment Amendment (Growth Areas Infrastructure Contribution) Bill 2009 (“the Bill”) passed its first reading on 10 November 2009. The Bill has been released only 2 weeks after the initial Exposure Draft was released for public comment – as such, it appears that few of the submissions / concerns of industry have found their way into the final Bill.

The main objective of the GAIC is to fund infrastructure costs in emerging development areas including transport, community, environmental and economic financial assistance.

The contribution liability is triggered as a result of a “GAIC Event” occurring and payable only once on each piece of land. A GAIC Event includes:

The issue of a statement of compliance by a Responsible Authority relating to a plan of subdivision of land in the contribution area;
The making of an application for a building permit to carry out building works
The occurrence of a dutiable transaction relating to land in the contribution area (including a transfer of dutiable property or the transfer of interests in an entity that holds substantial dutiable property).

The GAIC will be imposed at a flat rate of either $80,000 or $95,000 per hectare in the contribution area. Specifically, GAIC will be levied on the following parties:

The Bill sets out several exclusions and exemptions where GAIC would otherwise be imposed. For example, lots less than 0.41 of a hectare or a lot with an area between 0.41 hectares and 2.03 hectares that has a habitable dwelling on it will not be subject to GAIC when a transfer of the lot occurs. Likewise, building permits sought for building works of less than $1,000,000 will be exempted from the GAIC. Similarly, where a transfer of land is exempt from duty under the Duties Act 2000, GAIC will not apply to the transaction - this could occur for example, where a transfer occurs between spouses, as a result of marital breakup or as a result of a deceased estate.

The Bill also allows for applications for a reduction of GAIC in exceptional circumstances where the party having the liability to pay the GAIC has an existing agreement to provide infrastructure to the State themselves.

Where GAIC arises as a result of the transfer of land, the purchaser of the land may apply to the State Revenue Office to defer payment of the GAIC. In these circumstances, a penalty interest rate will be imposed on the outstanding GAIC balance.

If you would like to obtain further information regarding the introduction of the GAIC, relevant exemptions or rates, please do not hesitate to contact either Tim Olynyk or Stephen O’Flynn on (03) 9614-4444.