Windfall gains tax applies where a rezoning increases the value of land by more than a set amount. Under sections 8 and 9 of the Windfall Gains Tax Act 2021 the owner of the rezoned land at the time of the rezoning is liable, and under section 42 any unpaid tax and interest is a first charge on the land.
Because the liability attaches to the owner at rezoning, it is the vendor's responsibility and is not an adjustable outgoing. Section 10H of the Sale of Land Act 1962 makes it an offence to enter into a contract or option that purports to apportion an existing windfall gains tax liability to a buyer, and any such clause has no effect, with penalties for breach. The allocation may be reflected in the negotiated price but cannot be an adjustment on settlement.
Exclusions under section 3 and related provisions include land zoned for public use, land subject to the growth areas infrastructure contribution, residential land up to a limited area under section 37, and rezonings underway before the scheme's start date under section 40.
This is the kind of matter CMK Legal's property and conveyancing team handles.
A buyer cannot be made to carry an existing windfall gains tax liability, so a clause attempting it is void. Because unpaid tax is a first charge on the land, a buyer should still confirm the position where a rezoning has occurred.
Law referenced: Windfall Gains Tax Act 2021 ss 3, 8, 9, 37, 40, 42; Sale of Land Act 1962 ss 10H, 10I.