Insights Library
Industry Update – Changes to Growth Areas Infrastructure Contribution and Section 35 Plans
* Please note there have been Further changes to GAIC and the details can be found in this article
https://www.besthooper.com.au/Insights-library/important-amendments-to-gaic-and-section-35-plans/
Growth Areas Infrastructure Contribution (GAIC) has been a contribution that has been navigated for over a decade by the development industry within our greenfields. Over the years, we have seen a variety of amendments to the regime, including excluded subdivisions for school sites and, more recently, the separate application of subdivisions for public-purpose land. Best Hooper has worked throughout this time with many developers in relation to strategies for managing a potential GAIC liability.
The State Parliament has recently introduced the State Taxation Acts Amendment Bill 2023, which proposes to introduce several changes to the application of a variety of taxes, rates and charges.
Amongst these are changes to the GAIC regime in the Planning and Environment Act 1987.
Historically, GAIC is only triggered on the occurrence of specific events for land in a contribution area, being the issue of a statement of compliance for a plan of subdivision, issue of a building permit and a dutiable transaction. Each of these have various exemptions that apply. Accordingly, it was common for public-related subdivisions in our growth areas to occur by way of a plan under section 35 of the Subdivision Act 1988, which did not require a statement of compliance and therefore was not a GAIC event.
The legislative amendments now seek to introduce a fourth trigger event, being certification of a section 35 plan.
Best Hooper is already working with many developers to understand these changes and how they impact the development of a greenfield site.
For example, the amending legislation introduces an “excluded event” which does not trigger GAIC being certification of a section 35 plan that is an excluded subdivision of land. An excluded subdivision includes a subdivision by a public authority or municipal council where no additional lots are created. A lot does not include a road or reserve. Accordingly, we query the actual impact of this amendment in seeking to capture the situation where a developer and authority work together to effect a section 35 subdivision to create a reserve, noting that section 35 plans can only be undertaken by an acquiring authority. This may be subject to further review.
This may change the dynamic of commercial negotiations with authorities relating to subdivisions of land.
Interestingly, there does not appear at this stage to be a carveout for authorities exercising powers of compulsory acquisition which also usually engage a section 35 plan to update the register for a partial acquisition in fee simple. The amending legislation appears to impose a GAIC liability on a dispossessed owner of land in circumstance where the acquiring authority acquires a freehold interest in part of a parcel of land in a contribution area (at the time of certification of the acquisition plan).
It is expected that this legislative amendment will receive royal assent late June 2023, with the GAIC provisions taking immediate effect.
The transitional provisions provide that if a section 35 plan has been submitted for certification prior to the commencement of these changes, then it will not apply.
Best Hooper is Victoria’s Property, Planning and Land Development Advisory Law Firm that commonly acts for landowners and developer throughout the development cycle, including GAIC strategies. We are one of the leading firms in this area of practice.
