A significant new tax/levy/fee (call it what you will) comes into effect July 1, 2015 and is of importance to all practitioners that provide advice or prepare planning permit applications within metropolitan Melbourne. The Metropolitan Planning Levy (MPL) effects 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.
So… what is it?
The Building a Better Victoria (State Tax and Other Legislation Amendment) Act 2014 introduces a Metropolitan Planning Levy. The legislation makes changes to the Planning and Environment Act 1987 (“the Act”) and implements the levy through the Victorian planning system.
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 explanatory note to the Building a Better Victoria (State Tax and Other Legislation Amendment) Bill 2014 states its purpose is to impose a levy for the privilege of making certain planning permit applications.
The MPL is only relevant to planning permit applications within “Greater Melbourne”, as specified by the Act. The exact area specified includes Banyule, Bayside, Boroondara, Brimbank, Cardinia, Casey, Darebin, Frankston, Glen Eira, Greater Dandenong and Hobsons Bay City Councils well as land contained within the urban growth boundary of the Mitchel Shire planning scheme.
The MPL must be paid prior to making the planning permit application. Once paid a MPL certificate will be issued. The planning permit application must be accompanied by a current MPL certificate.
Where a combined planning scheme amendment and permit application for development is made, the levy is also applicable. 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 sets out:
(2) The threshold amount is—
(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.
The following examples calculate the MPL amount for developments with an estimated cost of $1.65 million and $5.6 million:
$1,650,000 divided by $1000 = $1650. The MPL: $2,145 ($1,650 x $1.30);
$5,600,000 divided by $1000 = $5600. The MPL: $7,280 ($5,600 x $1.30).
New Section 96R sets out the formula for calculation the CPI adjustment and gives the Commissioner of State Revenue the responsibility of advising each relevant Council of the CPI adjusted amount for the following financial year, as well as publishing the CPI adjusted amount for the following financial year on an appropriate website.
New Section 96S requires a person wishing to make a planning permit application to give notice and pay the required levy amount to the Commissioner of State Revenue. The notice must be in the form approved by the Commissioner, state the estimated cost of the development and contain the information required by the Commissioner. The website of the State Revenue office (www.sro.vic.gov.au) provides a summary of the MPL process including the links to the MPL application form, which can be completed online, with an estimated 2 day wait for the Certificate. An application for an MPL must include an estimate of the cost of the development proposed.
New Section 97T sets out the information that the Commissioner of State Revenue must include on the MPL, and also states in Section 97T(3) that Subject to section 96U(3), a levy certificate expires 90 days after the day on which it is issued. New Section 96U enables the State Revenue Office to issue a revised MPL Certificate if there were errors in the initial MPL, or if the estimated development cost is different from that stated in the application. This means an applicant should lodge the planning permit application within 90 days of receiving the MPL Certificate, otherwise another will need to be sought.
New 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;
Summary of the new process for practitioners
- 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.
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 however it will have negative impacts on the cost and processing of planning permit applications within metropolitan areas.
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