The Metropolitan Planning Levy (MPL) affects planning permit applications with an estimated cost of development greater than $1mil and must be paid prior to the lodgement of the planning permit application. This significant and costly new tax/levy/fee (call it what you will) came into effect in July 2015 and is of importance to all practitioners that provide advice or prepare planning permit applications within metro Melbourne.
The Building a Better Victoria (State Tax and Other Legislation Amendment) Act 2014 introduces a Metropolitan Planning Levy. The State Government website states:
“The levy will support delivery of better state and metropolitan strategic planning. An improved planning system will facilitate implementation of key planning initiatives to ensure quality growth and development of the Melbourne metropolitan area”.
The MPL is only relevant to planning permit applications within “Greater Melbourne”, as specified by the Act. The area specified includes Banyule, Bayside, Boroondara, Brimbank, Cardinia, Casey, Darebin, Frankston, Glen Eira, Greater Dandenong and Hobsons Bay City Councils.
The MPL must be paid prior to making a planning permit application, and an MPL certificate will be issued. An applicant is required to submit their MPL certificate when lodging their planning permit application. Importantly, applications to amend existing permits are exempt from the levy.
The levy is payable when an application for development exceeds the threshold amount set out in new Section 96P of the Act, which states:
(a) in the financial year beginning on 1 July 2015, $1 million; and
(b) in the financial year beginning on 1 July 2016 and each subsequent financial year, the CPI adjusted amount calculated in accordance with section 96R.
The amount of the levy is $1.30 for every $1000 of the estimated cost of the development for which the permit is required. If the estimated cost of the development is not a multiple of $1000, the estimated cost must be rounded up or down to the nearest $1000. For example the MPL fee on a $1.65 million development would be $2,145 ($1,650 x $1.30); and on a $5.6 million development, $7,280 ($5,600 x $1.30), representing a considerable expense for applicants, even before Council has had a chance to consider the merits of the application.
Section 97V provides that there will be no refund given of the MPL unless there is a mathematical error identified in calculating the estimated cost. Otherwise, Section 97V(2) does not allow a refund if:
- The planning permit application is refused, withdrawn or lapses;
- The permit is granted then subsequently cancelled or expires;
- The estimated cost of development decreases after the initial application for an MPL is made.
Critics of the introduction of the levy cite the lack of recourse if an application fails or is withdrawn as being unfair to proponents. In many instances, an application’s scale is pared back considerably as a result of negotiations with Council, yet there is no ability to seek a refund of the MPL fees already paid on a more costly or ambitious project.
In a Nutshell
- From July 1, 2015: The MPL must be paid prior to lodging a planning permit application within metropolitan Councils if the development cost is greater than $1m;
- From July 1, 2015 a MPL Certificate must accompany planning permit applications within metropolitan Councils if development cost is greater than $1m;
- The certificates are only valid for 90 days and are generally not refundable or transferrable, even if the application is lapsed, refused or if a permit is issued but expires.
- If an application’s overall construction costs diminish or fall below the $1m threshold, there is no opportunity to seek a refund of the MPL already paid.
For more information visit the State Review Office website: http://www.sro.vic.gov.au/
This new tax is a massive windfall for the state coffers and a substantial burden for permit applicants. It is critical that practitioners understand the implications and regulations that surround the MPL so that permit applicants can avoid being forced to pay the levy multiple times.
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