Doing taxes can often be terribly confusing. Although the systems for filing taxes and returns are somewhat organised in Australia, you might still need help keeping track.
One thing is certain: It’s almost impossible to feel comfortable doing taxes without learning about them.
In that regard, “council rates” are one of the most common terms you’ll come across while doing your taxes. But if that confuses you, don’t worry; you’re not alone. In fact, many Australians aren’t too confident in their understanding of council rates.
This article will discuss the specifics of council rates in Victoria. However, much of this information can be applied to all of Australia. With this article, our primary goal is to keep all Victorians informed and aware.
If you’re seeking a more extensive look at property buying in the area, our in-depth article about buying your first home in Victoria is a must-read. Pair it with this article for a comprehensive understanding!
What are Council Rates?
In simple words, council rates are a type of property tax. Both the federal and state governments have councils that are in charge of helping people in their communities. Here’s where you can find council rates explained in more detail.
This council offers over 100 services to the locals, but these services require funding. One of the sources of the council’s funding includes charging council rates to the crowd.
These councils have held the power to levy rates for funding since the Local Government Act of 1989. You can find more details about the council on the official website.
More About the Council
The local government in Victoria currently has 79 councils to represent the state’s citizens. All the councils represent a specific area, and each manages and plans to care for the local needs.
Several factors determine the type of council an area needs.
For example, some areas may be rural while others are urban. Consequently, this affects the types of issues they face. Council members must be eligible to deal with various social, economic, and cultural issues.
Why Should I Pay Council Rates?
The Victorian council offers the locals over $100 billion worth of services. While residents do not fund the entire amount, their council rates make up a significant portion.
These councils manage the waste disposal in your area, ensure you meet your basic needs, and make your locality safer. As a responsible citizen, you must pay the council rates in your area for its development.
The council has the legal authority to seize your property if you do not make the necessary payments.
How Is the Council Rate Calculated In Victoria?
The council rates you pay are based on the value of the property you own. As with any other property tax, owners of expensive properties pay higher rates.
The primary method used to decide the council rates for the following year is the “rate in the dollar method.”
Rate In the Dollar
The council decides the rates by putting together the value of all properties on which they can levy rates. Once they get the final figure, they select a certain percentage of the value. This percentage can also be referred to as the “rate in the dollar.”
The primary consideration for the council when determining the rate is their target revenue. So, if they want to raise $100 million in revenue on properties worth $1 billion, the rate would be 10%. 10% means ten cents in a dollar, which is the rate in the dollar for the year.
Calculating Property Values
The first step to using the rate per dollar method is putting together property values. You might wonder how the council decides the rateable properties and their values. The council officials or the State Valuer General elect professional valuers to do the job.
How Often are Council Rates Paid In Victoria?
The frequency of your council rate payments depends on your payment method. The payments could be made once per year, quarterly, or even monthly. However, the last option is rare since many councils do not accept monthly payments.
Most Expensive Council Rates In Victoria
Since the COVID-19 pandemic in 2020, council rates have gone up significantly, and they’re likely to keep going up due to steady inflation worldwide. However, government officials have set a limit on how much the rates can rise each year. The rates are slightly lower in 2022–2023 than in previous years. The rate cap for this term is 1.75%
As we mentioned earlier, every council handles a locality. The area with the highest council rates in Victoria is Melbourne. Several factors are behind the council rates in the city rising so high.
The prime factor is that Melbourne is the most populous city in the state. So, if you’re stuck on the highway during Melbourne peak traffic hours, this is an area that would be taken care of by your local council.
The average council rates in Melbourne for 2022–2023 are 3.6 and 4.2 for non-residential and residential properties, respectively. These figures take the rate per dollar method of calculation into account.
When are Council Rates Due?
You must pay council rates annually. You can either pay them in part or make lump-sum payments.
However, the most common payment method is four instalments throughout the year. You can pay these instalments by the end of February, May, September, and November every year. However, if you are eligible to pay the lump sum amount, your payment will be due until February 15.
Remember that the council can seize your property if you don’t pay the rates. Also, it’s important to remember that the debt from late payments stays with the property, not the owner. So, if you buy a piece of land, you must clear its previous council rates, regardless of your predecessor.
Victoria Council Rates: Everything You Need to Know – Final Thoughts
Victoria has 79 councils for each of its areas that can levy rates. These rates are to fund the council’s services for the locals. Moreover, the most common way to calculate council rates is using the “rate in the dollar” method.
If you fail to pay these rates on time, the council can appeal to seize your property. Lastly, your duty as a responsible citizen is to pay your council rates on time and help the community.
