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GOOD FOR YOU! (also GOOD ON YOU!) is an expression used to show approval for someone's success, good luck or a good act. Congratulations! Well done! Good news! Good job!

"I heard you got the promotion—good for you!" (congrats)
"Good for you, for stopping to help! (you're a good person)

A slight emphasis is usually placed on both "good" and "you" or whoever is being mentioned. 

"Good for him, getting an A in that difficult class."

"Good for you" is used in both BrE and NAmE. "Good on you" is a lot more common in Australia and New Zealand. It can be shortened to "Onya".

 A: "I just got a raise." B: "Good on ya, mate!"

What's the proper way to respond to the phrase? You have a choice - just accept it, possibly say "Thanks". The alternate is to be self deprecating - "It was nothing really."

 A: "I told him what I thought of his rotten behavior." B: "Good for you! He needs it." B: "Yeah! Thanks."

The phrase can be said in an enthusiastic tone and be a cheer, or it can be said in a snide, sarcastic manner or overly enthusiastic tone and mean the opposite:
"Wow, that's great. Do you want a pat on the back or something?"

A: "I got accepted into Stanford!" B: "Good for you!" (So what do you want? A cookie? An award? A medal or a chest to pin it on?", etc)

It can mean "I'm jealous and I wish that good thing had never happened for you because I think it should have happened to me instead." 

A: "I just got the promotion that you were hoping for!" B: "Good for you!" (Eat my shorts! You are certainly full of yourself. May you further inflate your sorry self until you burst with pride or just plain burst!) 

It may also mean "Oh, really? I don't care!" 

A: "Guess what I'm doing tomorrow? Going to the movies!" B: "Good for you." (get lost, tell someone who cares)

That said, "Good for you!", depending on the context and tone, can (and often does) mean that the speaker is genuinely pleased for the person they are speaking to. That's great! I think you have done very well! You deserve it! 

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