Rates Frequently Asked Questions
“What happens with the rates revaluation – does Council raise even more income?”
The simple answer is no. Council first develops its expenditure budget required to provide various services to the community. It then consider all other income sources before deciding how much it should raise in general rates. Councils use property values only as a vehicle for distributing the rating burden across the municipality.
The rate in the dollar has a negative correlation to the movement in property valuation, meaning that property valuation movements have zero impact on the rates income. Rising property values result in a lower rate in the dollar, while decreasing property values result in a higher rate in the dollar to offset the impact of the overall increase or decrease in property values.
Council does not collect extra rate revenue as a result of a revaluation. At the same time, Council does not lose any revenue as a result of a valuation decrease.
Here's some calculations to explain how Council determines rates values:
- Rates income: Total expenditure minus total income other than rates
- Rate in the dollar: Rates income divided by the combined value of all rateable properties in the municipality
- Your share of the rate bill: Rate in the dollar multiplied by the value of your property (as determined by the Valuer-General Victoria)
“I own properties in other municipalities – why are the rates different?”
There are many factors to consider in making such a comparison, but we can try and break this down to four key points:
- Councils have different financial commitments (i.e.: different budget requirements for capital works, ongoing costs, proposed works that are needed to provide services across the municipality)
- Councils have different income sources (i.e.: parking, income from leisure and recreation centres etc.)
- The number and range of properties in the municipality
- The relative value of a selected property (i.e.: the value of your property relative to the total value of all rateable properties in the municipality. Properties with higher relative value pay a greater share and vice versa).
“Why are my rates more than the rating capping increase compared to last year?”
The key factors in determining your share of the Council’s rate bill are:
- The value of your property; and
- How your property value has moved in comparison to the movement of the combined valuation of all rateable properties in the municipality.
Here's a couple of example situations:
- The value of Mr A’s residential property has gone up more than the average valuation increase of all rateable properties in the municipality. As a result, Mr A’s increase of rates expenses for the next year will be more than the average capped increase.
- The value of Mrs B’s residential property has gone down, though there is an increase in the combined valuation of all rateable properties in the municipality. As a result, Mrs B will pay less rates in the next year.
Despite valuation movements, Council will still collect the same rates income. Valuation movements will result in some ratepayers contributing more and others contributing less towards the total rates income of Council.