Publication-GAIC-01-17

This bulletin explains the recent changes to Part 9B of the Planning and Environment Act 1987 (the PEA) which deal with the Growth Areas Infrastructure Contribution (GAIC).


2016 changes to the GAIC scheme

The GAIC helps provide infrastructure for Melbourne’s expanding fringe suburbs. It is a one-off flat rate contribution payable when an ‘event’ associated with urban property development first occurs, such as buying, subdividing or applying for a building permit relating to the land in the contribution area (GAIC land).

From 16 November 2016, Part 9B of the Planning and Environment Act 1987 (the PEA) has been amended to:

  • Ensure that the GAIC or deferred GAIC liability becomes payable on a subdivision to provide public purpose land,
  • Remove the GAIC exemption for compulsory acquisitions by public authorities and municipal councils, and
  • Clarify that a GAIC or deferred GAIC liability may be apportioned when the land is subdivided

These amendments were made by the State Taxation Acts Further Amendment Act 2016 (STAFAA 2016).

Public purpose land subdivisions

Public purpose land is land specified in a plan of subdivision as being a lot, parcel or other area of land for the purpose of a utility installation, transport infrastructure or other public purpose. For example, land provided for local roads, drainage and utility easements, local open space areas and community facilities is public purpose land.

The issuing of a statement of compliance relating to a plan of subdivision of land in the contribution area is a GAIC event that will trigger the GAIC liability on the entire land. However if the subdivision is an excluded subdivision under s201RF of the PEA, it does not trigger the GAIC liability for the land.

Sections 201RF(a) and (b) of the PEA previously provided that the subdivision of land in the contribution area solely to provide land for public purposes was an excluded subdivision. However, these provisions were repealed with effect from 16 November 2016.

As a result of this and other clarifying amendments, a subdivision that would have previously qualified as an excluded subdivision under either of these repealed provisions is now a GAIC event which triggers the GAIC liability for the land.[1] 

The PEA now contains a definition of public purpose land and expressly provides that a subdivision solely to provide land for a public purpose will trigger the GAIC. However, the Act also provides that a landowner who triggers the GAIC liability this way is only required to pay the GAIC or deferred GAIC liability attributable to the public purpose land. The GAIC liability for the remaining lot of land is not triggered or remains deferred until the next GAIC event.

Payment of GAIC on public purpose land subdivision

Payment of the GAIC or deferred GAIC liability for the public purpose land must be made in full within three months of the issue of the statement of compliance relating to the plan of subdivision of land. The liability cannot be deferred or discharged under a staged payment arrangement. Once the GAIC liability on that land is discharged, the GAIC recording against the land is removed, allowing any public authority that subsequently acquires the land to acquire it free from any GAIC encumbrance.

Commencement

The amended provisions will apply to a statement of compliance relating to a plan of subdivision issued on or after 16 November 2016, except where the plan of subdivision was submitted for certification prior to 12 October 2016, being the date the State Taxation Acts Further Amendment Bill 2016 was Second Read and the amendments made public. 

Example 1 - Subdivision of land solely to provide land for a public purpose is the first GAIC event

Greenacre Developments Pty Ltd owns 10 hectares of type A land in the contribution area. It applies to subdivide the land solely to provide 0.6 hectares of that land for the public purpose of installing telecommunication services after 12 October 2016.

The statement of compliance for this plan of subdivision was issued on 1 December 2016 which is a GAIC event.

The GAIC liability is apportioned, with $55,110 allocated to the 0.6 hectares of public purpose land and $863,390 allocated to the remaining lot.

As the subdivision is the first GAIC event relating to the land, it triggers the GAIC liability for the public purpose lot. Greenacre Developments Pty Ltd is liable to pay GAIC amount of $55,110 within three months of the date of the issue of the Statement of Compliance for the public purpose lot. The GAIC liability for the remaining lot (9.4 hectares) and will only be triggered when the next GAIC event occurs in relation to this land.

Example 2 - Subdivision of land subject to a deferred GAIC liability solely to provide land for a public purpose

On 1 December 2015, Goldenacre Developments Pty Ltd became the owner of 10 hectares of type A land in the contribution area and deferred the GAIC liability of $904,700.

Goldenacre Developments Pty Ltd subsequently subdivided the land solely to provide 0.6 hectares of that land after 12 October 2016, for the public purpose of establishing a drainage easement. The statement of compliance relating to the plan of subdivision for this land was issued on 8 December 2016.

The deferred GAIC liability is apportioned in proportion to the land area of the subdivided lots.

Goldenacre Developments Pty Ltd is liable to pay deferred GAIC plus interest of $56,011 for the 0.6 hectare public purpose land and the GAIC liability for the remaining lot (9.4 hectares) will continue to be deferred until the next GAIC event occurs.

Example 3 - Subdivision of land to provide land for a residential development, including public purpose land

Greenfields Development Pty Ltd owns 10 hectares of type A land in the contribution area. It applies to subdivide the land for the purpose of a residential development, part of which will be a public purpose land. The statement of compliance relating to this plan of subdivision was issued on 1 December 2016 and it is the first GAIC event relating to the land.

As the subdivision has multiple purposes and is not solely to provide public purpose land, Greenfields Development Pty Ltd is liable to pay the GAIC in respect of the entire land in the plan of subdivision, within three months of the date of issue of the statement of compliance. However, it may apply to the Minister for approval to pay the GAIC in stages.

This scenario is unaffected by the amendments. 

Plans of subdivision submitted for certification prior to 12 October 2016

Transitional provisions apply to plans of subdivision that were submitted for certification before the amendments were made public on 12 October 2016.

Where appropriate, plans of subdivision submitted for certification under the Subdivision Act 1988 (SA) before 12 October 2016 will be considered under the former s201RF(a) or (b) of the PEA. [2]

This will be the case even if the statement of compliance is issued after 16 November 2016.

A plan of subdivision submitted for certification after 12 October 2016 will be considered under the former s201RF(a) or (b) of the PEA, if the statement of compliance was issued before 16 November 2016.

Compulsory acquisitions by public authorities or municipal councils

The exemption for compulsory acquisitions by a public authority or municipal council has been removed.

Landowners are now required to pay the GAIC if they have to subdivide their land to provide public purpose land to be compulsorily acquired by the authority.  The public authority or municipal council that acquires the public purpose land is not liable to pay GAIC as the GAIC liability was triggered and payable by the landowner immediately before the subdivision.

Where a subdivision is not required to provide land to be compulsorily acquired by a public authority and the acquisition of the land is the first GAIC event, the public authority or municipal council is not liable to pay GAIC if an exemption under the PEA applies.

Apportionment of GAIC liability

The GAIC is designed to subsist with the affected land. Consistent with this fundamental principle, when land subject to a GAIC or deferred GAIC liability is subdivided, the GAIC or deferred GAIC is apportioned between the new lands in the resulting child titles.

Where land is to be subdivided into multiple lots or parcels (child lots), the GAIC or deferred GAIC liability will be apportioned across the child lots based on the area these lots bear to the area of the parent lot.

For example, if an area of land is to be subdivided into two equal lots, the GAIC liability will be apportioned equally across each of the new lots, i.e. 50 per cent of the liability will be allocated to Lot 1 and the remaining 50 per cent allocated to Lot 2. 

Administrative changes

To support the above changes to public purpose land subdivisions, certificates of partial release will be provided to land owners once payment of the GAIC or deferred GAIC liability on the public purpose land has been received. This will facilitate the registration of the plan of subdivision and the removal of the GAIC recording from the title of the affected public purpose land.


[1] Note that s201RF continues to exclude other identified subdivisions; such as to provide for a school, however, none of these are public purpose subdivisions. 

[2] This is the date the State Taxation Acts Further Amendment Bill 2016 was second read in Parliament.