Understanding your rates

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Why are rates collected?

Each council collects rates from residents and businesses in its municipality to help fund local infrastructure and services. Councils use property values as the basis for distributing the rating burden across the municipality. Calculating the amount that each property owner has to pay in rates involves determining the total amount of rate revenue and dividing this across the total value of all rateable properties to establish a rate in the dollar.

The rate in the dollar is then applied against each individual property value to calculate how much each property owner pays. The Victorian legislation that enables councils to levy rates and charges is the Local Government Act 1989.

Indigo Shire is one of the lowest rating small, rural shires in the North East of Victoria. The average rates per assessment for Indigo Shire residents is below the average for small shire councils, the majority of surrounding shires and the overall state average per assessment.

Your rates contribute to nearly half of Council's overall budget, which also includes government contributions, fees and charges.

When do I need to pay my rates?

Council rates are payable in four instalments. Instalment notices will be issued at least 14 days before each instalment is due. You can pay any or all instalments in advance of their due dates.

If electing to pay by instalments, your first payment (as shown on your rates notice) must be paid by 30 September.  A reminder notice will be sent before each instalment due date.

How are rates calculated?

Each rateable property pays a standard municipal charge that contributes to the running costs of Council. In addition rateable properties also pay a variable rates component that is calculated for each individual property.

A property’s variable rates are calculated by multiplying the valuation of the property by the rate in the dollar. For example, if the Capital Improved Value of a property is $250,000 and the council rate in the dollar is set at 0.0042 cents, the rate bill would be $1050 ($250,000 x 0.0042).

The three valuations shown on your rate notice are Site Value (SV), Capital Improved Value (CIV), and the Net Annual Value (NAV).
  • SV: Site Value is the market value of the land only.
  • CIV: Capital Improved Value is the total market value of the land plus buildings and other improvements.
  • NAV: Net Annual Value is either 5% of the CIV or the current value of a property's net annual rental (gross annual rental less specified outgoings such as insurances, land tax and maintenance costs, but excluding Council rates). Residential dwellings and own your own flats by law must have an NAV which is 5% of the CIV.

Your rate notice will provide specific details on how your rates are calculated.

Differential rates

Differential rates are where councils set different rates in the dollar for different categories of rateable land. Councils are able to levy either a uniform rate across all properties, or one or more differential rates. The council may, for example, have differential rates for farmland, various categories of residential property or commercial/industrial properties – each paying a higher or lower rate in the dollar.

What is a municipal charge?

The Local Government Act 1989 allows Council to declare a Municipal Charge on properties to cover some of the administrative costs of the Council. Indigo Shire has applied this charge to all rateable properties. An exemption from this charge may be granted where the following criteria is met:

  • Property is rateable land;
  • Property must be used primarily for farm purposes;
  • Property must be greater than 2ha;
  • Property must be part of a single farm enterprise;
  • Same person or people are the ratepayers for all the properties within the single farm enterprise;
  • Ratepayer is not a body corporate; and/or
  • Property does not have a principal place of residence constructed on it (i.e. a house)

The value of the current charge appears on your rates and valuation notice. This is a flat dollar amount on each property to cover some of the administrative costs of the Council and is the same for all properties. This charge recognises that some benefits apply to all property owners irrespective of property valuation. Municipal charge exemptions apply to multiple rate assessments that form a single farm enterprise. To be eligible for a municipal charge exemption:

  • The land must be farmland; and
  • The land must form part of a single farm enterprise.

The municipal charge must be paid on at least oneproperty of a single farm enterprise. An exemption cannot be claimed for more than one principal place of residence.

Documents

Indigo Shire's Rating Strategy(PDF, 758KB)