Environmental Mitigation Levy introduced in Victoria under the Melbourne Strategic Assessment (Environment Mitigation Levy Act) 2020 (Vic)

In brief

The Melbourne Strategic Assessment (Environment Mitigation Levy) Act 2020 (Vic) (Act) commenced on 1 July 2020 and established a new legislative framework to impose the Environmental Mitigation Levy (Levy) to fund mitigation measures for impacts on biodiversity caused by this type of development. Given the time which has passed since the Act's commencement, landowners and developers of land are now triggering the Levy and accordingly we provide below a summary of the Levy and how it applies. 

Affected land

The Act applies to areas declared by the Secretary of the Department of Environment, Land, Water and Planning (DELWP) to be a 'Levy Area' under section 10 of the Act. At present, key growth corridors in Melbourne's north, west and southeast have been declared to be Levy Areas, including Cardinia, Casey, Hume, Melton, Mitchell, Whittlesea and Wyndham. 

A full description of the current Levy Areas established on 25 June 2020 by a declaration of the Secretary of DELWP can be found here. 

Where land is affected by the Act and liable for the Levy, the Secretary of DELWP will register a notice on the land title. This is designed to ensure compliance with the Act, but it will not affect a landowner's ability to deal with the land until the Levy is triggered. 

Levy and Levy rates

The amount of the Levy is calculated according to the type of vegetation (Levy Rate) on the land and the size of the land in hectares (Habitat Area). The product of the Levy Rate and the Habitat Area is the sum that will become payable when the Levy is triggered.

A Levy Rate is assessed each financial year and adjusted according to a composite index comprised of the consumer price index and wage price index. 

The current Levy Rate for the 2021/2022 financial year are set out in the below table:
 

Triggers

The Levy will be triggered on the occurrence of any of the following 'Levy Events', which are set out in section 21 of the Act:

• The issue of a Statement of Compliance for a plan of subdivision.

• An application for a building permit.

• An approval of a work plan or variation of a work plan under the Mineral Resources (Sustainable Development) Act 1990 (Vic).

• The construction of utility infrastructure on Crown land.

• The construction of a road on Crown land.

Once the Levy has been paid, subsequent Levy Events in respect of the same land will not trigger a further liability. 

Exclusions

The Act excludes a number of events from triggering a liability to pay the Levy. These events generally relate to activities that are minor in nature, or do not involve the type of substantial urban expansion that the Act is designed to offset. 

Sections 5 to 7 of the Act define what constitutes an 'Excluded Event' that will not incur the Levy. This includes, but is not limited to, the following activities:

• A subdivision that is solely to realign the common boundary between two lots, and the area of either lot is reduced by no more that 5% of its original area.

• A subdivision that is solely to create a lot not exceeding two hectares for the purpose of excising an existing dwelling on the land.

• A subdivision along a Levy Area boundary to create two lots, one wholly within the Levy Area and the other not within the Levy Area.

• The demolition of a building or part of a building.

• The construction of a single dwelling.

• The repair or reinstatement of an existing building.

• An addition or alteration to an existing building that does not change or increase the floor area of the building.