Legislative Changes to the Application of GAIC OCT 2016

John Cicero
1 November 2016

We recently reported on Best Hooper’s involvement in the Supreme Court decision of Frontlink Pty Ltd v Commissioner of State Revenue. This landmark case confirmed that if developers were required to divest land for public purposes, they would not automatically face a Growth Areas Infrastructure Contribution (GAIC) liability if approached correctly.

Since the Frontlink decision, we have been providing advice to our clients on how to strategically engage in the excluded subdivisions to potentially achieve significant savings of GAIC. However, proposed legislative changes introduced into Parliament on 11 October looks certain to extend the application of GAIC resulting in landowners facing potential increased contributions in the coming months.The proposed legislative changes will increase the area of this land subject to GAIC. “This essentially means that the liability for GAIC will be broadened to capture subdivisions that would have otherwise been excluded from

The proposed legislative changes will increase the area of this land subject to GAIC. “This essentially means that the liability for GAIC will be broadened to capture subdivisions that would have otherwise been excluded from trigerring GAIC by reason of having a public function, such as providing State infrastructure,” explains Joel Snyder, Senior Associate with Best Hooper.

What will the changes mean for your land development project?
Having reviewed the proposed legislative changes, we have identified key areas that will be of greatest importance to our clients:Section 201RF(a) and (b) will be repealed. These provisions refer to excluded subdivisions for the sole purpose of creating a lot for utility installation, transport infrastructure or any other public purpose, however school lot excluded subdivision exemption will continue to apply.

Section 201RF(a) and (b) will be repealed. These provisions refer to excluded subdivisions for the sole purpose of creating a lot for utility installation, transport infrastructure or any other public purpose, however school lot excluded subdivision exemption will continue to apply.The term ‘public purpose land’ will be inserted into the Act, and will refer to land allocated for the public purposes referred to in Section 201RF(a) and (b)..

The term ‘public purpose land’ will be inserted into the Act, and will refer to land allocated for the public purposes referred to in Section 201RF(a) and (b)..

If a plan of subdivision has a sole purpose to provide for ‘public purpose land’, GAIC will be payable on the child lot and apportioned accordingly, but not triggered on the balance of the land. Staged Payment Approval will not be available in these instances.If GAIC is triggered by a dutiable transaction, such as the transfer of land, land owners and developers will still have the option to defer payment. Under the new legislation, however, should owners and developers defer liability and then subdivide, they will pay liability in accordance with the stages created in the subdivision.

If GAIC is triggered by a dutiable transaction, such as the transfer of land, land owners and developers will still have the option to defer payment. Under the new legislation, however, should owners and developers defer liability and then subdivide, they will pay liability in accordance with the stages created in the subdivision.The GAIC exemption on compulsory land acquisitions will be repealed and landowners may be required to pay the contribution, depending on particular circumstances.

The GAIC exemption on compulsory land acquisitions will be repealed and landowners may be required to pay the contribution, depending on particular circumstances.“We are disappointed that Parliament has taken this approach given that land owners will be required to pay GAIC on land that is required for a public purpose, except for a school site. This is especially considering that public purpose land will be providing land for urban infrastructure, rather than generating a demand for that infrastructure. This contradicts the initial intention of the GAIC regime, which was to raise a levy on land that created such demand”, says Snyder.

“We are disappointed that Parliament has taken this approach given that land owners will be required to pay GAIC on land that is required for a public purpose, except for a school site. This is especially considering that public purpose land will be providing land for urban infrastructure, rather than generating a demand for that infrastructure. This contradicts the initial intention of the GAIC regime, which was to raise a levy on land that created such demand”, says Snyder.Important transitional provisions

Important transitional provisions
Timing is an important issue in the proposed GAIC changes. In the instance that a plan of subdivision for an excluded subdivision has been submitted to council before 12 October and it receives certification at any time after that, GAIC will not be triggered under the “old” provisions.In addition, if an application for certification is made on or after 12 October and a statement of compliance is issued before the proposed amendment bill receives Royal Assent, an excluded subdivision will also not trigger GAIC.

In addition, if an application for certification is made on or after 12 October and a statement of compliance is issued before the proposed amendment bill receives Royal Assent, an excluded subdivision will also not trigger GAIC.“The important message is that there is still time to act,” says Snyder. “The sooner that you apply for certification and receive a statement of compliance, the more likely you will be exempt from the proposed GAIC changes.” This, however, creates difficulty for those land developers that are still waiting for a PSP gazettal.

“The important message is that there is still time to act,” says Snyder. “The sooner that you apply for certification and receive a statement of compliance, the more likely you will be exempt from the proposed GAIC changes.” This, however, creates difficulty for those land developers that are still waiting for a PSP gazettal.We encourage clients who have been advised about GAIC in recent months to get in touch with us in order to review their strategy. Best Hooper will be hosting an upcoming information session on 2 November 2016 at 5

We encourage clients who have been advised about GAIC in recent months to get in touch with us in order to review their strategy. Best Hooper will be hosting an upcoming information session on 2 November 2016 at 5:30pm where Joel Snyder and John Cicero will explain the details of the proposed legislation and how it may impact your development project. If you are interested in attending this information session, please contact Morgan Koloni on 9691 0236 to register your interest.