Private ruling: Windfall gains tax - CGT cost base - third element
Date of advice: 29 January 2026
Published: 23 March 2026
Ruling period: Year ending 30 June 20XX
Date scheme commenced: X Month 20XX

Ruling: Q1: Will the Victorian windfall gains tax (WGT) on the taxpayer's interest on the Land acquired after 20 August 1991, be included in the third element of the cost base under subsection 110-25(4) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. The windfall gains tax you incurred on the rezoning of your Land resulted in a value uplift of more than $X amount. Therefore, you became liable for the Victorian windfall gains tax. You were able to defer payment of this liability for up to 30 years or until the next dutiable transaction. You hold a 50% pre-CGT interest in the Land when you purchased the Land in 19XX, and a 50% post-CGT interest in the Land when you acquired your late partner's interest in 20XX. Therefore, you are able to portion 50% of the windfall gains tax liability against your post-CGT interest in the Land, as part of the third element of the cost base of the interest in the Land that your acquired after 20 August 1991, plus any interest incurred on that amount under subsection 110-25(4) of the ITAA 1997.

Relevant facts and circumstances: In 19XX, you purchased the property as joint tenants with your late partner. The property consists of 'the Land' and 'the Property' The Property is your main residential address, and you have lived at this address since 19XX. You have no intention of selling the Property. The Property does not form part of the Development Agreement with the Developer. In 20XX, you acquired your late partner's 50% interest in the Property and Land. The Property and the Land were both initially zoned as farming land. You were not involved in the rezoning of the Land. Your local Council initiated the rezoning. The Victorian Planning Authority led the rezoning process from 20XX through to 20XX. Resulting from the rezoning, the value of the Property and Land significantly increased your council rates. On X Month 20XX, you were levied with the Victorian Windfall Gain Tax Liability (WGT) imposed under Windfall Gains Tax Act 2021 (Vic) (WGT Act) which is applied to land that is rezoned by a planning scheme amendment resulting in a taxable value uplift to the Land of more than X amount. You applied to defer payment of the full WGT, and your deferral application was granted in the 20XX income year. Assumptions That the Land will be sold by 30 June 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 110-25(4)