Much of a Council's income comes from taxes on property (land and buildings) called rates. Each year owners of property - including houses, farms and businesses - must pay rates to the Council. The amount paid depends on the value of their property. For example, the amount of rates paid by the owner of a house or flat will be much less than the amount paid by the owner of a large property or business.
There are some organisations, however, that are either not required to pay rates at all on their property or pay a significantly reduced amount in Council rates. Organisations that fall into this category include the State and Federal Governments, charities, churches, hospitals and schools.
Before collecting any rates a Council first establishes exactly what services will be provided in the next financial year and how much those services are expected to cost. It formally adopts a budget. Within this budget the amount of money that will be collected from other sources is estimated. The Council can then work out how much money must be collected from the community in the form of Council rates to balance its budget. The Council discussions are open to the public and the budget is available to the public.
Councils must follow rules set out in the Local Government Act 1999. Within this framework there is some degree of flexibility to allow Councils to take into account local issues. Therefore, the way one Council sets its rates may be different to that of another Council and the level of rates overall reflects different costs and service provision levels (e.g. some Councils run a swimming pool and some don't).
A Council must set a "policy" on how it will determine rates. This is a broad statement by the Council of the approach that it will take and the reasons for this. This process helps to ensure community accountability. After a Council sets its rates for the year it sends out a "rates notice" or invoice setting out how the rates can be paid. Included with this notice is a brief summary of the Council's rating policy and information on where the full policy document can be seen.
Councils determine how much each ratepayer pays in rates by taking into account property values in the area. The property values used by Councils are usually those set by the Valuer-General. If you believe the value set is inaccurate, you can object.
There are three possible types of valuations available to Councils, which are:
- The capital value of the property which includes both the value of the land and the value of any buildings or other structures on it (used by most Councils).
- The site value of the property which in essence is simply the value of the land.
- The annual value of the property which takes into account the rental potential of the property.
Failure to pay rates can result in a debt which becomes a "charge" against the land. This means that the debt will transfer to any subsequent owners of the property. In extreme cases, a council can sell a property to recover unpaid rates.
For more information on how Councils determine rates there are a series of fact sheets at the Local Government Association of South Australia website.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.