Preheat oven to 180°C/160°C fan-forced. Grease a 6cm-deep, 19cm square cake pan. Line base and sides with baking paper.
Sift flour, spice and cinnamon into a bowl. Add sugar, carrot, chopped walnuts, oil and eggs. Stir to combine. Spread into prepared pan. Bake for 1 hour 15 minutes or until a skewer inserted into centre comes out clean (cover loosely with foil if over-browning). Stand in pan for 10 minutes. Turn out onto a wire rack to cool.
Make frosting: Using an electric mixer, beat cream cheese and lemon rind until smooth. Gradually beat in sugar until smooth. Spread frosting over cake. Decorate with walnuts. Serve.