The Napthine Government's planning tax legacy

The Napthine Government's planning tax legacy
Urban EditorialJune 7, 2015

From 1 July 2015 a new levy under the Planning and Environment Act 1987 (Vic) (the Act) must be paid to the State Revenue Office in respect of all planning permit applications for developments in metropolitan Melbourne with an estimated development cost of over $1,000,000. The levy is $1.30 for every $1,000 of the estimated cost of the development.

This payment is in addition to statutory planning application fees and due to the formula used to calculate the levy it will, at a minimum, double the cost of lodging a planning permit application.

When is the Metropolitan Planning Levy (MPL) payable?

Leviable applications are:

  1. applications for a planning permit for development of land;
  2. within Metropolitan Melbourne (defined as the land falling within the Urban Growth Boundary plus some nearby areas including Yarra Ranges and Mornington Peninsula); and
  3. for an estimated cost of more than $1,000,000 (adjusted for inflation from 1 July 2016).

What is the process?

  1. A planning permit application cannot be lodged with the Responsible Authority without presenting a certificate indicating that the MPL has been paid.
  2. The prospective applicant must first notify the State Revenue Office that it intends to make an application and state the estimated cost of the development.
  3. The prospective applicant must pay the MPL to the State Revenue Office. This can be done by electronic funds transfer.
  4. The Commissioner may request information in relation to the permit from the Responsible Authority to verify the estimated cost of the development.
  5. The Commissioner will issue a certificate as evidence of payment, which must be provided to the Responsible Authority with the permit application and which expires after 90 days. If within this period, but before a permit application is lodged, the estimated cost of the development increases, the prospective applicant must pay any additional levy and the Commissioner will issue a revised certificate.

Can an applicant obtain a refund of the MPL?

Only if a mathematical mistake was made. Otherwise, no refund is available, even if:

  1. the estimated cost of the development decreases after the MPL is paid;
  2. the permit application is not subsequently made, lapses, is refused or is withdrawn;
  3. the threshold amount increases between the time of the payment of the levy and the making the application, so as to make a given development application no longer leviable; or
  4. the permit is granted and is subsequently cancelled.

This means that upon refusal of a permit application, another MPL must be paid and certificate received before a second application can be lodged.

There is no right of appeal to the Victorian Civil and Administrative Tribunal.


The MPL was announced in the 2014-15 State Budget and is intended to fund the ongoing development of planning policy and strategy for the Melbourne metropolitan area, including the operations of the Metropolitan Planning Authority and the implementation of Plan Melbourne. It appears to have been introduced without any consultation with the industry. Furthermore, no detailed break down of exactly what the Levy is going to fund has been released.

It is understood that the levy is not intended to penalise home owners or small developments but rather to apply to more significant development applications. However, the $1,000,000 threshold is likely to affect a significant number of developments and extend the reach and impact of the levy.

It significantly increases the statutory fees required to undertake development applications without any apparent benefits to the permit applicant. The inability to review the requirement for the MPL or seek a refund increases the costs and risks associated with permit applications for developers.

The MPL is clearly a tax on the application process. The taxation nature of the 'levy' is revealed by recognising that it was introduced by legislation entitled 'Building a Better Victoria (State Tax and Other Legislation Amendment) Act 2014'.

Other issues

It is unclear how the estimated cost of development is to be calculated. The State Revenue Office indicates that it is based on the 'construction cost', although it is not clear whether other development costs might also be included, such as engineering fees, design fees, other development levies and contingencies.

The legislation is also not clear on whether the estimated cost is to be calculated according to market rates, by reference to a reasonable cost estimate of a similar development or based on individual developers' estimated costs. The SRO has the power to request verification of an estimate and there is the potential for additional costs and delays for developers if quantity surveyor statements are required.

A further administrative burden will be placed on Councils (who incidentally take no benefit from the MPL) as they will be required to ensure that the necessary certificate has been issued before processing applications.

Finally, the additional costs may impact on the quality of the permit applications with developers seeking to save on costs in the preparation of the application materials which will create inefficiencies in the process and further costs for Council and the applicant down the track.


The lack of information how the MPL funds are going to be spent is problematic. It is unlikely that developments at the bottom end of the scale will see any benefit from MPL payments made.

There is more likely to be a nexus between very large development and MPL fund spending and in that regard it is arguable that it would be more equitable to raise the MPL trigger to a level that will ensure that the developments required to pay it will are the ones that will see some benefit from the funds raised.

James Lofting is a Senior Associate at HWL Ebsworth Lawyers in their Planning and Environment Group.

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