Amendments to the GAIC Scheme
As part of the Gillard Government's election commitment, the Planning and Environment Amendment (Growth Areas Infrastructure Contribution) Act 2011 was enacted on 29 June 2011 which sets out major changes to the Growth Areas Infrastructure Scheme (GAIC) Scheme.
100 Percent Deferral
The existing 70% deferral of a GAIC liability for a dutiable transaction on lands in the contribution areas has now increased to 100% in respect of land transfers with a settlement date on or after 30 June 2011 or significant acquisitions made on or after that date.
WIK Agreements
There is now scope to partly or fully settle GAIC liability
"in-kind" instead of strict cash payments by entering
into 'work-in-kind '(WIK)
agreements. To be administered by the Growth Area Authority
(GAA) and the State Revenue Office
(SRO), these agreements provide for land or works
instead of cash payment in discharge of a GAIC liability.
Key notes to consider include:
- The subject property must be in a growth area and ably funded from the Growth Areas Public Transport Fund or Building New Communities Fund;
The agreement must be entered into before the due date for GAIC liability (but may be entered into to discharge a GAIC liability which arose prior to 30 June2011);
- A WIK agreement is subject to the approval of the State Government;
- A consultation process must be conducted by the Minister to ensure no other minister has interest in the subject matter of the agreement;
- The Treasurer's approval is required for WIK agreements with a GAIC liability of over $2 million. This could be an issue for large-scale developers.
WIK agreements must be registered in land titles and the Land Registrar must be notified to restrict dealings on subject lands. Failure to comply with the terms of the WIK agreement shall make the whole GAIC amount immediately payable as if the GAIC had never been deferred or staged and relevant interest and penalty tax accrues.
Technical amendments
Broadly, the following were also set out to enhance the operation of the GAIC scheme:
- From 1 July 2010, a GAIC exemption applies to land that is a small lot of 0.41 hectares or less which is either a lot in a plan of subdivision or a lot created by an excluded subdivision.
- All applications for reduction or exemption from GAIC in exceptional circumstances should be made to the Minister (rather than to the Governor in Council).
- The due date for payment of GAIC on application of reduction, exemption or relief is the later of original due date of the GAIC or 14 days after being notified of the outcome of the application.
- Any deferred GAIC liability that is rolled over to a new owner due to a subsequent dutiable transaction will include any interest accruing on the deferred amount.
If you hold a property in the Melbourne growth areas and would like to know how these changes could impact your property dealings, please contact Stephen O'Flynn on (03) 8635 1986.
This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2011 Moore Stephens Australia Pty Limited. All rights reserved.